Consumer confidence in France holds steady, despite Covid restrictions

27 Aug 2021

Consumers in France were only slightly less confident regarding their economic prospects this month, despite soaring Covid infection numbers and new regulations requiring a health pass to enter many retail outlets.

According to the INSEE official statistics agency, its monthly consumer confidence index declined to 99 from 100 last month, falling short of the average forecast for 100 in a survey of 10 economists carried out by Reuters.

The index had reached a high in June of 102 – the highest reading since the start of the coronavirus crisis – as vaccination rates increased and restrictions were relaxed.

However, now France is facing its fourth wave of the virus due to the spread of the Delta variant, earlier this month the government imposed additional requirements, such as proof of vaccination to enter restaurants, bars and shopping centres.

Furthermore, this latest survey revealed that the number of households who consider now is a good time to make large purchases remained steady this month, exceeding the long-term average. Saving objectives also increased for the first time in three months, Reuters reports.

Unemployment worries also stayed the same from July, with vacancies increasing as businesses faced a mounting struggle to find staff.

Moreover, the number of households forecasting prices to increase over the next few months marginally rose as supply chain issues result in companies having to hike their prices.

The comparatively minor fall in consumer confidence indicates that the health pass is having only having a small effect on economic activity, despite regular protests throughout France.

Following a stronger-than-forecast first half of the year, the governor of France’s central bank, Francois Villeroy de Galhau said on Thursday that the bank may increase its growth forecast for this year of 5.75% when its estimates are reviewed in September. He went on to add that the economic impact of the Delta variant of coronavirus was forecast to be limited.