French economy stalls in first quarter, inflation hits new record

Date:

- Advertisement -

France’s economic growth unexpectedly flatlined in the first quarter as consumer spending dropped in the face of record high inflation, official data showed on Friday, putting pressure on President Emmanuel Macron ahead of legislative elections.

The INSEE official statistics agency said preliminary data showed no change in gross domestic product for January-March. That signalled a sharp slowdown from the final three months of 2021, when the euro zone’s second biggest economy expanded 0.8%, which was revised up from 0.7% previously.

Inflation and first quarter GDP figures for the 19-nation euro single currency zone are due later on Friday.

While a slowdown in France had been expected, the reading was worse than expectations for growth of 0.3% in a Reuters poll of 24 economists, whose forecasts ranged from 0.6% to -0.1%.

Household spending, the traditional driver of French growth, fell 1.3% in the quarter as consumer confidence waned amid concerns over surging energy prices and the war in Ukraine, eclipsing any boost from an easing of COVID restrictions.

Inflation has soared from record to record in recent months, rising unexpectedly in April to touch a new high of 5.4%, INSEE said in a separate report on Friday.

The latest inflationary spike will offer fresh fodder to Macron’s opponents who accuse the president of not doing enough to protect consumers’ purchasing power heading into legislative elections next month that will determine whether he has a majority to govern for the next five years.

His current government has put together a 25 billion euro ($26.3 billion) package of measures to help protect consumers’ dwindling purchasing power and consisting in large part of caps on gas and electricity price increases.

But that did not stop the cost of living from being a major theme in France’s presidential election this month, which incumbent Macron won on Sunday by beating far right leader Marine Le Pen.

“Although government measures have shielded households from the worst of the energy price rises, the broader rise in inflation will still take its toll on real incomes and spending,” said senior Europe economist Jessica Hinds at consultancy Capital Economics.

“One silver lining, at least, is that the French economy is less exposed to the Ukraine conflict than most in the euro zone, including Germany,” she added.

Macron has indicated that his first steps after the June vote will include further measures to help consumers such as subsidies for people on low incomes who have to use their cars, as well as an increase in pensions.

($1 = 0.9491 euros)

Latest

More like this
Related

Ecomondo 2024: Italy Leads Global Green Transition with Record-Breaking Sustainability Fair

Ecomondo 2024 opens in Rimini with over 1,600 exhibitors and 100 countries. Italy's green economy takes center stage at this global event, showcasing innovations in sustainability, decarbonization, and the circular economy.

Ecomondo 2024: A Global Hub for Green Innovation

Ecomondo 2024: Connect with global leaders in the green economy. Explore sustainable solutions and network with experts from around the world

KEY 2025: A Global Hub for Sustainable Energy Solutions

KEY 2025: The Energy Transition Expo is the leading global platform for the energy industry. Discover the latest innovations, connect with industry experts, and explore sustainable solutions for a greener future.

Guinea-Bissau’s Blockchain Breakthrough: A Paradigm Shift in Public Wage Management

Guinea-Bissau has successfully implemented a blockchain-based platform to revolutionize its public wage bill management. This innovative solution enhances transparency, efficiency, and accountability in government finances, setting a new standard for public sector management in the region.

Ecomondo 2024: The Mattei Plan and Africa’s Green Growth in Focus

Join Ecomondo 2024, Europe's leading event for green technologies, focusing on Africa's sustainable development, global environmental challenges, and the Mattei Plan. November 5-8 in Rimini, Italy.

Smart City Brazil Goes Global: Italian Exhibition Group Takes the Helm

Italian Exhibition Group (IEG) has joined forces with the Smart City Business America Institute (SBCA) to organize the SCB-Br Expo and Congress, starting in 2025.

Tunisia, Netherlands, and Africa Boost Cooperation with New Triangular Pact

Tunisia and the Netherlands have joined forces with Africa to strengthen economic ties through a recently signed agreement.

Tunisia’s Trade Gap Widens in May

Tunisia's trade deficit grew 12% in May compared to April, according to the National Institute of Statistics (INS). The deficit reached TND 1.44 billion, up from TND 1.27 billion the previous month.