Consumer confidence hit 14-month high this month
Consumer confidence here hit a 14-month high this month, as concerns eased about the economic outlook.
Hopes for additional Government measures to offer some respite from price pressures may also have boosted sentiment, the Credit Union Consumer Sentiment Index suggests.
Confidence continues to be fragile though, with a majority of consumers still feeling that the worst of the cost-of-living crisis is not behind them.
Conducted by Core Research, the index is now at 62.4, showing the trend of improving sentiment that has been underway since last year is now well established and stronger than elsewhere in the euro area and US.
“However, the May 2023 reading still remains some distance below the 27-year series average of 86.5 and, as such, points to a still cautious mood on the part of Irish consumers,” said Austin Hughes, economist and author of the report.
The upgraded economic forecasts for the Irish economy may have been a factor in the improving mood, Mr Hughes suggested.
The second biggest monthly improvement in the survey was around the outlook of household finances.
“One explanation could be that an improving economic tide is seen lifting all boats, but it may be more plausible that some consumers expect that one consequence of the fiscal windfall will be material additional support measures in the upcoming Budget ’24,” said Mr Hughes.
Modest month-on-month improvements were also recorded in the jobs element of the index, following positive announcements and official statistics pointing towards a buoyant employment market.
The special question asked this month focused on whether consumers think the worst of the cost-of-living crisis is behind them.
But the research found three out of five respondents disagree with this statement.
Indeed, the majority of consumers said they are planning to curtail spending in coming months, either to make ends meet, protect against further turmoil or to make a special purchase.
A further one in four consumers said they will curtail spending because of nervousness about the future.
22% of consumers do believe the worst is over though, with that view more frequently held by those aged under 35 and over 65, and by males rather than females.
“The reality is that prices are still going up and that’s what the survey is signaling. it is not as bad as feared, but it’s still difficult for consumers and there is still a strong sense that there is an onus on the Government to give some support in the months ahead and into the budget,” Mr Hughes told Morning Ireland.
He added that in the context of the talk round the cumulative budget surplus of a projected €65 billion in the years ahead, there was a sense that there is improves fiscal space.
“That will give some leeway to help in terms of the still very substantial cost of living pressures,” he explained.