French households suffered a sharp loss of confidence in the country’s economic situation according to the latest monthly survey by national statistics agency Insee, as consumers turned more pessimistic on both their personal finances and the prospects for the eurozone’s second-largest economy as a whole.

The headline index fell four points in February, reverting to its long-term average of 100. Economists had expected it to edge down by just one point, to 103, according to a poll by Thomson Reuters.

Consumers were more glum than January on just about every measure on which they were surveyed.

They reported feeling worse about the future prospects for their personal finances and their ability to save, and significantly downgraded their view of their recent historical financial position. There was an acute rise in the number of households perceiving rising inflation over the past year, and consumers were less cheery about the standard of living in France — although the reading remains above the long term average for the measure.

Claus Vistesen of Pantheon Macroeconomics suggested worries over inflation could be starting to bite as wage growth remains lacklustre:

The main index was dragged down by sharp declines in consumers outlook for their economic and financial situation in the next 12 months.

By contrast, consumers’ purchasing intentions and their “fear of unemployment” remained unchanged, consistent with decent growth in spending and a continued fall in unemployment. The slide in households’ outlook for their finances and overall economic situation coincided with a jump in perceived inflation expectations; this is to say, an increase in households who observed rising prices in the past 12 months.

Nominal wage growth remains weak in France, indicating that consumers are worried about maintaining their purchasing power — le pouvoir d’achat — which is a key economic gauge for French households and politicians.

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