French Consumer Spending Declines More Than Forecast

French consumer spending on manufactured goods declined more than economists forecast in March, as accelerating inflation undermined households' purchasing power.

Spending by consumers, which accounts for about 15 percent of the economy, fell 1.7 percent from February, when it rose a revised 1.3 percent, Insee, the Paris-based national statistics office, said today. Economists expected a 0.2 percent drop in March, the median of 33 estimates in a Bloomberg News survey showed.

Surging food and energy prices pushed euro-area inflation to 3.6 percent last month, the fastest pace in almost 16 years, underscoring the European Central Bank's reluctance to lower interest rates. Inflation in France, the second-biggest economy among the 15 nations that use the euro, accelerated to 3.5 percent, the highest since 1996, when Insee started reporting the data.

Spending on cars fell 1.5 percent from the previous month after a 7.5 increase in February, and increased 8.7 percent from the year-earlier month, Insee said. Textile and leather goods slid 7.9 percent, following a revised 1.4 percent rise in February. From March of last year, they declined 6.9 percent.

Household goods slipped 0.7 percent last month after February's 0.2 percent drop. From March last year, they added 7.9 percent.

Consumer spending rose 1.2 percent in March from a year earlier, today's report showed. It increased 0.6 percent in the first quarter after a 0.1 percent drop in the last quarter of 2007.