Domestic Spending Hits Lowest Point Since 2014 Economically
In the present scene, people's spending habits have reached a new low, not seen since November 2014, barring the COVID-19 pandemic. Caroline's shopping cart has significantly less meat, thanks to the escalating prices. "Steak for every meal? Forget about it!" she said during a supermarket interview. "We consume more now because we can't afford the same things as before. It's not a choice," she added. Meanwhile, inflation clings to a mere 0.8% year-on-year in April. But food prices are far from deflating, mainly for items with a chocolate or sugar base, like sodas.
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A dip in spending was noted in March, not just in food, but also in energy expenditure and new car purchases. Things are slowing down at a car dealership in Paris, with sales dropping by 8% since the start of the year. "There's a shift happening between new vehicles and used vehicles," said Franck Malochet, director of the Alvergnas Auto group, "with customers opting for vehicles that are a bit older and maybe more affordable." Sectors that are drying up and stifling growth. The unpredictable global economic climate compels the French to save, not splurge.
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The current French economy is swayed by a myriad of elements, including increased food prices, inflation, and reduced consumer spending. Yet, these issues are not at the forefront of recent economic discussions. Here's an overview of the status quo:
- 2025 Economic Growth Forecast: France has adjusted its 2025 economic growth projection from 0.9% to 0.7% due to uncertainties associated with tariffs and looming trade wars with the U.S.[1][2]. This adjustment reflects broader economic risks rather than specific consequences from inflation or food price increases.
- Trade and Tariffs: A potential trade war with the U.S. has been a significant worry, with France actively working to minimize its impact. Economy Minister Eric Lombard has hinted that further revisions depend on negotiations with the U.S. regarding tariffs[4]. This tense situation can indirectly influence sectors like automobiles and agriculture, possibly affecting consumer spending.
- Consumer Spending and Economic Recovery: While France enjoyed a slight economic recovery in the early part of 2025, with the Bank of France projecting a 0.2% growth in Q1, worries about trade tensions persist[3]. The recovery is partially fueled by the services and industrial sectors, including the booming luxury industry. However, there's a mix of signals regarding consumer and business sentiment due to tariff uncertainties.
Despite food prices and inflation being general concerns regarding economic stability, recent reports do not single them out as the primary culprits behind the present economic adjustments in France. The impact of trade tensions and tariffs seems to dominate the French economic landscape for 2025.
To delve deeper into the effects of food prices, inflation, and reduced consumer spending, analysis of detailed economic studies or surveys specifically targeting these areas would be required. However, the available data indicates that trade-related uncertainties are the primary focus of the present-day economic adjustments in France.
- The reduced consumer spending in France is not solely attributable to food prices and inflation, but also to paralyzing uncertainties associated with tariffs and looming trade wars.
- A potential trade war with the U.S. has become a significant concern, as the French economy grapples with the potential impact on sectors like automobiles and agriculture, which could further affect consumer spending.
- Despite the escalating food prices and inflation, the French economy shows a mix of signals regarding consumer and business sentiment due to tariff uncertainties.
- It appears that the present economic adjustments in France are primarily driven by trade-related uncertainties, rather than food prices and inflation. Detailed economic studies specifically targeting these areas may provide further insights into their individual impacts.
