Consumer confidence improved in June, reversing several months of decline as households took a more positive view of their finances amid falling energy and food prices, a new survey has indicated.
The Irish League of Credit Unions’ consumer sentiment index for the month reversed just over half of the cumulative losses seen in four consecutive monthly drops between January and May, said economist and report author Austin Hughes.
However, he said June’s 70.5 index reading remained “some distance below the long-term series average of 84.5″, suggesting households remain anxious about the cost of living.
The overall improvement was driven by positive feeling around household finances, Mr Hughes said, due to a combination of factors.
“First of all, June saw a reduction in motor fuel prices after a significant increase through the earlier months of 2024,” he said, before the summer holiday driving season. Central Statistics Office figures also point to a weakening of food price inflation in the month while June also saw the announcement of the first European Central Bank (ECB) interest rate cut.
Jack Chambers: what to expect from the youngest Minister for Finance since Michael Collins
Crucially, the month also saw a “notable increase in media commentary around the prospect of a ‘giveaway’ budget in the autumn because of the upcoming general election and the strength of recent tax returns”, Mr Hughes said.
But the cost-of-living crisis continues to weigh heavily on consumers’ minds, the survey indicates. Although households have expanded their spending plans, “there is little sense that economic and financial strains have eased to the point where a substantial step-up in spending is now envisaged”, Mr Hughes said.
About 40 per cent of households, meanwhile, said their income was above their spending over the survey period with a quarter of respondents indicating their income does not cover their spending at present.
Energy bills remained the most significant area of difficulty for consumers, according to the survey, despite declining wholesale energy prices over the past year.
“These responses are entirely consistent with the scale of increase seen in energy prices in recent years,” Mr Hughes said.
“Despite some significant recent pullback in energy prices of late, the average cost of energy products consumed by Irish households was 43.7 per cent higher in May 2024 than in May 2021.”
Households remain under “significant pressure”, he said, with the mood remaining “downbeat” despite the economy’s performance.
- Sign up for Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
