Finance news

French consumers cut spending on everything from restaurants to gambling last year as inflation and an economic slump took their toll.

Shoppers, the main contributors to the euro-region’s second-largest economy, increased spending at the slowest pace in 11 years, a report by statistics office Insee in Paris showed. They trimmed expenditure at cafes and scaled back visits to beauty salons, Insee said.

France’s economy slipped into recession in the third quarter and unemployment is the highest since 2006. While the government expects welfare payments and state aid to buoy spending, households are likely to keep to grip on consumption.

“Spending is going to suffer,” Insee’s chief forecaster Eric Dubois said in a phone interview yesterday. While he still expects consumption to increase this year, “superfluous” spending and “expenses that are the easiest to postpone” may be the first to disappear, he said.

The French government expects the economy to contract 3 percent this year before expanding 0 low fee payday advance.5 percent in 2010. It expects consumer spending to increase 0.3 percent in 2009 and 0.7 percent next. Consumers added 0.5 percent to growth in 2008, when the economy expanded 0.4 percent, Insee said.

Spending on restaurants and cafes dropped 2 percent last year, partly because of a smoking ban that started Jan. 1, Insee said. Spending at hair and beauty salons slipped 1.3 percent, according to the report.

Gambling fell 5 percent, the first drop since 1986. Lottery games were particularly hurt by the falling number of customers at cafés, where gambling is often available, Insee said.

Households’ tapped into their savings last year, helping limit the slowdown in spending. Households may instead start building up their savings this year as unemployment rises, Dubois said.

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