France: Lost in Consumption

5 min
Stephane Colliac
Stephane Colliac Senior Economist for France and Africa

In 2018, the French consumer is expected to experience a loss of purchasing power for the third year in the last decade, which is thus set to become the worst decade for the French consumer since World War II. Household purchasing power should decline by -0.2% this year, with a -1.2% fall estimated in H1 and a modest recovery expected in H2. Considering this poor landscape it is understandable that household confidence is still below par, without any particular positive impact of the World Cup victory. In August, the household confidence index was stable at 97 points, below the level of 100 (historical average). During the last decade, that index stayed below par as a result of subpar income and purchasing power growth. The latest data means that private consumption is no longer the main growth driver in France. We expect that private consumption growth (+0.9%) will lag overall GDP growth (+1.7%) in 2018 for a second year in a row, and again in 2019 (+1.6% vs +2%, respectively).