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French consumption rebounds in January, country falls into deflation

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Staff writer ▼ | February 29, 2016
French households' consumption expanded more strongly than expected in January, boosted by energy purchases and those of household goods.
French consumption
Second economy   Economy in France grew slightly more quickly than expected
Total household consumption increased 0.6% month-on-month at the start of the year, following a rise of 1.0% in the month before.

In comparison with a year ago consumption stood 0.6% higher. That was better than the advance of 0.6% month-on-month and 0.3% year-on-year which economists had penciled in. Energy consumption grew by 3.4% and that of manufactured goods by 0.7%, while purchases of food declined by 0.8%.

The Eurozone's second largest economy fell back into deflation in February, amid widespread weakness across all categories. France's consumer price index declined by 0.2% year-on-year, after a rise of 0.2% in the month before, according to INSEE. Economists had been expecting a flat reading.

France's economy grew slightly more quickly than expected at the end of 2015, as government spending and investment offset drags from consumption and net exports.

The country's gross domestic product expanded at a 0.3% quarter-on-quarter clip, according to revised figures published by INSEE. That was better than the 0.2% rise which economists had been forecasting and INSEE's own preliminary estimate.

Net trade shrank at a revised pace of 0.5% quarter-on-quarter, in comparison to the -0.3% initially thought. However, that was more than offset by upwards revisions to household consumption and government spending, to -0.2% and 0.5%, respectively.