This is its largest monthly decline since December 2018. The drop is notably linked to lower purchases of automobiles. But purchases of clothing and housing equipment are also in decline. INSEE also confirmed the 0.1% drop in GDP in the fourth quarter of 2019 and revised last year’s growth slightly upwards.
Black January for traders in France. Even before they had to suffer the likely effects of the coronavirus epidemic, they were, during the month of January, faced with consumer disaffection. According to figures released this Friday morning by INSEE, household spending on goods fell 1.1% in January.
This is the largest drop observed over a month for almost a year. It is indeed necessary to go back to December 2018 to find a more significant fall. That month, in the midst of the “yellow vests” crisis, household consumption fell by 1.3%.
More growth and purchasing power than announced
Bad news for the government, even if, at the same time, INSEE – which confirmed the 0.1% drop in GDP in the fourth quarter – revised upwards the growth figure for the whole of the year. Public statisticians now estimate that French growth was 1.3% last year, and not 1.2% as they initially indicated.
However, even if INSEE notes that the purchasing power of gross disposable income “accelerates sharply in the fourth quarter and over the year as a whole” (with respective increases of 0.9% and 3.1% ), households did not loosen their purse strings in January.
Almost generalized drop in consumption in January
The drop in consumption observed in January affects practically all types of expenditure, and in particular purchases of manufactured goods, which fell by 2.7%. In question: the lower sales of new cars, which plunge by more than 7% those of transport equipment. This decrease was in part expected due to the entry into force, on January 1, of new conditions governing the ecological penalty. These had led to a real boom in sales and registrations of new cars which had climbed 27.7% in December.
But the decline in vehicle purchases does not explain everything. While the month of January was marked by the traditional winter sales, now in a version shortened to only four weeks against six previously, sales of textiles and clothing are also in the red. These expenses “fell again sharply in January,” underlines INSEE. After falling 1.3% in December, they fell 1.2% in January “under the effect of a combined decline in sales of fabrics, clothing and, to a lesser extent, shoes”.
Consumption of household capital goods “falls again”. It fell 0.9%, after falling 0.4% in December. A decrease which affects “in particular” the purchases of household appliances and those of furniture, indicates INSEE.
Mild weather that weighs on energy costs
But all is not completely dark in January. Purchases of “other manufactured goods” – which include hygiene, perfumes and drugs – rose 0.3% (after a 0.3% decline in December), as did food consumption. This rebounded by 0.2% (after a drop of 0.4%) “due in particular to an increase in the consumption of processed foods”.
As for energy consumption, it “barely recovered” by 0.1%, after falling 1.7% in December. A slight increase attributable to a month of January which, following on from December, was very mild. With an average temperature of 7.1 ° C, above normal of 2.2 ° C, January was “among the ten warmest months of January since 1900”.
Inflation slows slightly in February
Consumer prices in France rose 1.4% year-on-year in February, according to INSEE. This is slightly less than in January (1.5%) and this is primarily due to “a marked slowdown in energy prices and, to a lesser extent, food prices”.
Over one month, prices are stable, after falling 0.4% in January. This is thanks to a rebound in the prices of manufactured products after the end of the sales.