PARIS (Reuters) – France’s economy contracted unexpectedly during the first quarter, as consumers had to deal with rising inflation, according to official data on Tuesday. This puts pressure on President Emmanuel Macron ahead of legislative elections later this month.

According to INSEE, the second largest economy in the euro area contracted 0.2% between March and March of the prior quarter. The agency had earlier estimated that gross domestic product declined during this period.

Data breakdown revealed that consumers spending dropped 1.5%, rather than 1.3% as previously thought. As households cut back on their spending on cars and hotels, this resulted in lower consumer spending.

Even though activity was impacted by the Omicron version of COVID-19, a rise in inflation in consumer prices – which INSEE reported hit a record 5.8% last May – has contributed to a decrease in household spending.

INSEE has reported that consumers cut their April spending by 0.4% in the latest indication of rising inflation. However, Reuters economists had predicted an increase averaged 0.8%.

Thanks to 25 billion euros worth of cap on electricity and gas price rises, the French government has managed to lower inflation than any other EU member except Malta.

However, the dwindling purchasing powers hasn’t stopped it from being the most important political issue in the legislative elections this month. This will decide whether President Macron is able to get a majority of the parliamentary seats needed to rule for the next five-years.

Macron’s government promised to take new measures to increase purchasing power. These include an increase of base pensions, civil servants’ salaries and food subsidies for the hungry.

The chief of France’s central banks stated Tuesday that the most recent data about prices had only strengthened the case for European Central Bank to end its extraordinary monetary stimulus next week.

The inflation rate in the euro area rose to 8.1% last May. This is another record-breaking figure that challenges the ECB’s belief that gradual increases in interest rates starting July are sufficient to tame the price rise.

Francois Villeroy, Bank of France Governor de Galhau stated: “The most recent inflation figures from May in France (and other countries) confirm that we had expected an increase and highlight the necessity for a progressive and resolute normalization of monetary policy.”