Irish consumer confidence picked up slightly in August as the economic outlook was seen to have improved as a result of the Trump administration’s tariff deal with the European Union (EU).
The Credit Union Consumer Sentiment Index rose to 61.1 in August from a reading of 59.1 for the previous month, but remained well below 72.1 recorded a year earlier.
While the US-EU tariff deal reached in late July imposes a 15 per cent charge on most goods being imported from the union, weighing on economic activity and employment, economists say that the accord reduces uncertainty.
“Irish consumers likely responded in a marginally positive fashion both because the tariff deal should reduce uncertainty, and because the proposed scale of tariffs, while material, falls a good deal short of widely feared worst-case scenarios,” said economist Austin Hughes, author of the Irish consumer sentiment report.
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The latest report is based on 1,000 adults surveyed between August 6th and 17th.
“While the negative impact [of the deal] on the Irish economy may be material, it is likely to prove manageable,” said Mr Hughes.
“Preliminary official estimates suggest the tariff deal agreed between the US and the EU will shave about 1.5 percentage points off growth over five years, manageable in an Irish economy that might expect to grow a cumulative 10 to 15 per cent over a five-year time frame.”
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However, living costs continue to be “a painful and persistent difficulty” for many Irish households and weigh on wider sentiment, he said.
The subindex reading for individuals’ current personal financial situation dipped to 70.6 in August from 71.4 last month and 80.5 a year ago. “Rising grocery prices and back-to-school costs prompted a small further weakening in sentiment around household finances,” said Mr Hughes.
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A rise in food prices in recent months has been driven by outsized increases in the cost of high-profile staples such as butter and beef, which rose 19 per cent and 23 per cent, respectively, on the year in July, according to the latest Central Statistics Office (CSO) data. Milk, coffee and chocolate prices surged by 12 per cent, almost 13 per cent and 16 per cent, respectively, over the same period.
While the outlook for unemployment improved marginally on the month, it was down on the year.
The general economic outlook subindex rose to 20.5 from 17.8 in July, but was down from 32.5 for August 2024.
“While it is encouraging that consumer sentiment has edged higher in August, the main message of the survey is that elevated living costs remain a key issue for many Irish households,” said David Malone, chief executive of the Irish League of Credit Unions. “Consumers continue to turn to their local credit union for guidance.”
