A fall in consumer spending on manufactured goods in France last month is bad news for the government which has been trying to boost the country’s economic growth by encouraging people to buy more.
The contraction came despite a government initiative to get supermarkets to cut the prices of many brand name products in September. Consumer spending has recently kept the French economy growing faster than in the euro zone as a whole. The 0.6% fall in September together with July’s 2.9% meant that spending by consumers in the period from July to September declined 0.7% compared with the previous three months. Analysts said that this shows a slowdown with a strong chance that the French economy would slow even further next year. They said two factors are responsible, one is higher oil prices. The government has offered tax breaks to the fishing industry, farmers and truckers to head off protests over fuel costs. The second factor is that the jobless rate remains stubbornly high at 9.9%. Uncertainty about employment has discouraged households from increasing spending.