Consumer confidence dips despite rate cuts

DISCOUNTING BY retailers in the January sales created a strong buying climate but most Irish consumers remain deeply fearful about economic prospects in 2009, a new report claims.

According to the KBC Ireland/ ESRI Consumer Sentiment Index, consumer confidence dipped to 49.6 in January from 50.2 in December. The 50 mark separates growth from contraction.

While this is off record lows of 39.6 recorded last July, consumer confidence in the Irish economy over the next 12 months was the lowest on record, with 85 per cent of those surveyed expecting a further deterioration.

Austin Hughes, chief economist of KBC Ireland, said a sense of extra spending power due to price discounting for the post-Christmas sales coupled with a fourth interest rate cut had been more than outweighed by concerns over job security and the likelihood of higher taxes. (For a detailed report go to irishtimes.com/business).

He said the “torrent of bad economic news” during the survey period – which included the Dell layoffs and other negative employment news – had contributed to this concern. Some 92 per cent of respondents believe unemployment will increase this year.

“It is hardly surprising that Irish consumers became more worried about broad economic prospects and the risk of joblessness in January,” Mr Hughes said.