Inflation angst grips German consumers as blues ease in France
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[August 26, 2022] By
Leigh Thomas
PARIS (Reuters) - Consumer morale in the
euro zone's two biggest economies diverged starkly in August as French
consumers benefited from fresh government measures while concerns over
rising energy bills hit their German counterparts, surveys showed on
Friday.
The French government introduced a series of measures aimed at helping
the population withstand rising inflation over the past year, while
households in Germany are facing higher energy costs after the German
gas market operator set a levy from October to help utilities cover the
cost of replacing Russian supplies.
France's INSEE official statistics agency said its consumer confidence
index rose to 82 from 80 in July, above an average forecast of 79 in a
Reuters poll of economists. That was the first rise in consumer morale
in seven months.
Measures ranging from pension and civil servant pay rises to subsidised
rebate on car fuel prices come after the government already introduced
electricity and gas price caps last year ahead of presidential elections
this April.
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At 6.8% in July, French inflation remains the second lowest in the euro
zone after Malta.
"Household confidence should keep improving in autumn thanks to higher
incomes, which should allow for a slight improvement in purchasing
power," said economist Sylvain Bersinger at French economics consultancy
Asteres.
Consumer confidence also improved in Italy in August as the country
gears up for an election following last month's collapse of Mario
Draghi's government.
Consumer confidence in the euro zone's third largest economy rose
unexpectedly to 98.3 from 94.8 in July, returning to June's level,
Italy's national statistics institute ISTAT said on Friday. It came in
far above a median forecast of 92.5 in a Reuters poll.
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A banner reading "energy crisis,
inflation, impoverishment = government failure" is put on a vehicle
as people protest while German Chancellor Olaf Scholz visits a
research laboratory at Magdeburg University, in Magdeburg, Germany,
August 25, 2022. REUTERS/Fabrizio Bensch
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In sharp contrast, a survey on Friday showed German consumer sentiment is
projected to hit a record low for the third month in a row in September as
consumers brace for ever higher energy bills.
The survey from the GfK institute showed its consumer sentiment index falling to
-36.5 heading into September, against expectations in a Reuters poll for a
reading of -31.8.
The institute said German consumers were having to put aside money for future
energy bills and that the situation could worsen if winter gas shortages pushed
prices even higher.
German households, already grappling with the prospect of gas levies, may be
asked to foot an even greater bill in the current energy crisis, said Hauck
Aufhaeuser Lampe chief economist Alexander Krueger, further weighing on consumer
spending in Europe's biggest economy.
"What should be clear is that the coming recession will be fuelled primarily by
consumption. Since the government caused the gas debacle, it should provide much
more relief than it is currently signalling," he said.
(Reporting by Leigh Thomas; Additional reporting by Benoit Van Overstraeten in
Paris, Miranda Murray and Christian Kraemer in Berlin and Gavin Jones in Rome;
Editing by Ana Nicolaci da Costa)
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