Stagnant French consumer spending offers economy little respite
PARIS (Reuters) - French consumer spending largely stagnated in July and August, offering little support to the euro zone's second-biggest economy as it struggles to mount a convincing recovery.
The INSEE official statistics agency said spending fell 0.7 percent in July over one month as consumers spent less on food in particular, falling more than the 0.3 percent drop expected by economists polled by Reuters.
But consumer spending bounced back in August by 0.7 percent, beating economists expectations for a fall of 0.2 percent as households spent more on energy amid unusually cold weather.
With spending flat over two months, consumers will not be able to play their traditional role as the motor of growth in the French economy, which already stagnated in the first and second quarters.
The government is counting on corporate investment to revive growth after pledging to phase out 30 billion euros ($38 billion) in payroll tax, but firms remain reluctant to make risky outlays in the face of weak demand.
Producer prices fell 1.4 percent in August over one year, INSEE said in a separate report. That was the steepest fall since March and added to evidence that inflation pressures are largely absent in the face of vast slack in the economy.
The Socialist government estimates the economy will grow 0.4 percent this year, but even that already downgraded forecast could come under pressure if consumer spending or corporate investment proves weaker than expected.
(Reporting by Leigh Thomas; editing by Mark John)
