French Consumer Confidence Continues to Decline

The French National Institute for Statistics and Economic Studies (INSEE) released the results of its survey of consumer confidence today. The summary indicator declined by 4 percentage points in January from December, continuing a series of declines that began in July of last year. The recent increase in inflation added to earlier concerns over the strong euro and the fallout from the sub prime crisis in the U. S. has taken its toll on the French consumers' optimism.

According to INSEE, the level of the balance is not open to direct interpretation; it is the change in the balance that is important. For this reason, we show both the balance and the month to month changes in the balance in the first chart.

All five of the components of the indicator declined in January. The French consumer's chief concern was the outlook for living standards. The appraisal of the outlook for living standards over the next 12 months fell by 12 basis points. In spite of concerns for future living standards the French consumer saw little change, 1 basis point decline, in the appraisal of the favorability of conditions for major purchases. The second chart shows the appraisal of living standards over the past 12 month and over the next 12 months, together with the appraisal of the favorability of condition for major purchases.

The third chart shows the financial position over the past 12 months and its position over the next 12 months. The financial position over the past 12 months has declined in each month since June 2007 The financial position over the next 12 months has been declining since May and at a faster rate than the financial position of the past 12 months.