French consumer demand was sturdy in the last quarter of 2005, according to data this morning.
Data from national statistics office INSEE confirmed gross domestic product rose 0.2 per cent in the fourth quarter of 2005 compared with the previous three months, giving full year growth of 1.4 per cent. That compared with quarterly growth of 0.7 per cent in the third quarter.
Although this was in line with consensus forecasts, economists were caught off guard by the breakdown which showed consumer demand rose 0.7 per cent in the fourth quarter, the same pace as in the third, contributing 0.4 percentage point to growth.
That meant the widening trade deficit was the main culprit for the marked slowing of growth, cutting 0.5 percentage point off growth.
INSEE also showed consumer prices in the euro zone's second biggest economy fell less than forecast in January as the effect of winter sales offset higher energy prices by a smaller amount than expected.
January consumer prices fell 0.1 per cent compared with the previous month and climbed 2.3 per cent from a year earlier on an EU-harmonised basis. That compares with the 1.8 per cent annual rate of change reported for December.
Price tags on clothing and shoes were 6.6 per cent lower than the previous month, due to discounting for sales, while energy prices rose 1.7 per cent from December and 12.1 per cent from a year earlier.