RTTNews - French consumer spending unexpectedly increased in April on higher expenditure on automobiles, official data showed Tuesday.

Households spent 0.7% more in April than in March, statistical office INSEE said. Meanwhile, economists had forecast a decline of 0.3% for April. The increase was led by a 3.7% increase in spending on automobiles and a 0.8% growth in expenditure on durable consumer goods. On an annual basis, consumer spending rose 0.6%.

At the same time, the statistical office sharply revised the monthly growth recorded in March to 0.6% from 1.1%.

The government's EUR 1,000 car scrappage scheme had attracted consumers, lifting the spending on automobiles.

On a positive note, consumer confidence in April improved for a second straight month, though fears of unemployment continued to be on the rise.

The rise in unemployment, sparked by the global economic recession, may weigh on the prospects of consumer spending in the coming months. The French economy contracted 1.2% in the first quarter from the previous three months.

French Finance Minister, Christine Lagarde had said the economy is now set to shrink 3% this year. This is double the 1.5% decline estimated earlier by the government.

Annual inflation in France eased to 0.1% in April from 0.3% recorded in March.

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