French May Consumer Confidence Falls to Record Low as Oil Rises

Discussion in 'Economics' started by ASusilovic, May 28, 2008.

  1. Consumer confidence in France dropped to a record low in May as fuel and gasoline costs soared, prompting fishermen to stage protests about shrinking incomes.

    A gauge of consumer sentiment fell to minus 41, the lowest since the index was introduced in 1987, from a revised minus 38 in April, Insee, the Paris-based national statistics office, said today. Economists polled by Bloomberg had expected the reading to remain unchanged at minus 37, according to the median of 23 forecasts.

    President Nicolas Sarkozy earlier this week outlined tax breaks for companies that introduce or raise annual bonuses, and defended his plan to deregulate the retail industry amid the fastest inflation in at least 12 years. Yesterday, he pledged to raise a rebate on heating fuel for impoverished households by 50 euros ($79) to 200 euros next year.

    Economic growth ``will probably be less buoyant in coming quarters as French consumers are striking a bit, or at least spending less actively,'' Bruno Cavalier, an economist with Oddo & Cie. in Paris, said in an interview with Bloomberg Television before the report.

    France's inflation rate held at 3.4 percent in April after reaching 3.5 percent in March, the highest in at least 12 years. As a result, consumer spending on manufactured goods fell 0.8 percent in April from March, the third drop in four months, Insee reported last week.

    French shoppers are spending less and buying more generic- brand goods since the start of the year in an attempt to counter rising prices, Le Monde reported on May 26, citing Arnaud Mulliez, chairman of supermarket group Auchan France.

    We should see a further deteriorating European economy