French inflation rises in April

PARIS, May 14 (Reuters) - French inflation jumped in April on higher oil prices, raising the risk that consumers will rein in spending and adding to the inflationary pressures that are worrying the European Central Bank.

National statistics office INSEE said on Tuesday its consumer price index showed a monthly rise of 0.5 percent in standardised European Union measurement terms -- the same as March. Annual inflation was 2.1 percent in April after 2.2 percent in March.

"In France, and in Europe generally, consumption is very reactive to prices,'' said Stephane Deo, economist at UBS Warburg. ``So if inflation remains close to two percent, that is a potential problem.''

Nervousness about rising inflation, along with worries about unemployment, was a key factor in pushing French consumer morale to a four-year low in April, figures from INSEE published earlier this month showed. Consumer spending was key to helping the French economy escape recession last year.

Although the rise in April inflation was due mainly to increases in the price of oil products, which economists said was a temporary factor, service sector prices also rose -- notably for property rent and insurance.

"This upward trend will continue in the mid-term,'' Murat Toprak, economist at Societe Generale, said of the overall inflation rate.

The French data is the latest in a series of upward price pressures being watched by the ECB.

The ECB voiced concern earlier this month over the euro zone's inflation outlook, making it more likely that it will raise interest rates in the coming months.

"If we have (economic) activity going up quickly, inflation remaining close to two percent and a high wage deal in Germany, then the guys at the ECB will start to get nervous,'' said Deo.

The rise in inflation was broadly in line with expectations. Economists polled by Reuters gave a consensus forecast for a month-on-month rise of 0.4 percent and for the annual rate to register 2.0 percent.

In addition to persistent inflation and unemployment, economists say political uncertainty in France is another factor making consumers hold off spending.

Households are likely to resist going shopping until after legislative elections in June as they wait to see whether the political left or the right can win a majority.

Although considered unlikely, the 577-seat National Assembly could end up divided into three blocs if Jean-Marie Le Pen's far-right National Front wins enough seats to hold the balance of power.

This would mean a stalemate because parties of the left and right would not form a coalition with Le Pen's deputies.