Overview
- France's national statistics agency revised first-quarter GDP from zero growth to a 0.1% contraction, citing a larger-than-expected fall in domestic demand.
- INSEE said the decline was driven mainly by lower household spending on fuel after energy prices rose because of the Middle East conflict.
- Household consumption fell 0.2% in Q1 and then slipped another 0.5% in April, showing consumer weakness carried beyond the quarter.
- Headline inflation edged up to 2.4% in May from 2.2% in April, complicating policymakers' choices between supporting growth and cutting spending.
- The weaker data adds pressure on fiscal consolidation given last year's 5.1% deficit and arrives ahead of a scheduled S&P sovereign review that most economists expect to leave the rating unchanged.