French consumer spending data fuels hope for recovery

Among the areas of growth in household outlays were purchases of durable goods, up 1.9 percent, and cars, up 3.2 percent, the INSEE statistics agency said.

The news follows two other encouraging sets of economic data this week: consumer morale, which reached its highest level since May 2012, and an upturn in optimism among company bosses.

December spending, which was lifted by extra heating during cold weather, was revised upwards to 1.6 percent from 1.5 percent.

"These are pretty good figures," said Barclays economist Francois Cabau.

"We are heading for a clear acceleration of activity in the first quarter."

French economic growth was a meager 0.1 percent in the fourth quarter of last year and just 0.4 percent in 2014 as a whole, INSEE figures confirmed earlier this month.

INSEE's measure of consumer spending represents about half of total household outgoings, which in turn represent about half of French gross domestic product (GDP).

The government is banking on GDP growth of at least 1 percent this year to reduce joblessness, encourage investment, and deliver tax revenue that could help it meet demands from its European Union partners for it to reduce its deficit.

Producer prices fell 0.9 percent month-on-month in January, INSEE data also showed on Friday, showing the lack of inflationary pressures in the euro zone's second-largest economy.

(Reporting by Yann Le Guernigou; Writing by Andrew Callus)