Consumer sentiment was on “Santa pause” in December, holding steady as Irish households continued to weigh up the “conflicting and often confusing forces” affecting their economic and financial circumstances, the latest index shows.
Consumers are ending 2024 worried about the economic outlook and still dealing with cost-of-living pressures, but they are a little less negative about their household finances for the coming year and plan to spend more, said economist Austin Hughes.
Special A Christmas Carol-themed questions in this month’s Irish League of Credit Unions consumer sentiment survey also suggest that the Ghost of Christmas Yet to Come is lingering in the shadows for many Irish households.
Only 30 per cent of 1,000 adults surveyed believe the Irish economy will be somewhat or significantly better in a decade’s time, while 34 per cent said they thought it would be somewhat significantly worse than it is now.
“More Irish consumers envisage economic conditions will be weaker rather than stronger in 10 years’ time,” said Mr Hughes. “However, it should be emphasised that, as the Irish economy is delivering strong increases in activity and employment as well as healthy public finances, it could be argued that it would be hard to improve on current performance.”
The 29 per cent who said they expected the economy would be “broadly similar” to how it is today are “pointing to the persistence of very positive economic conditions”.
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In unsurprising contrast to the misery of Scrooge and the contentment of the poor Cratchit family in the Charles Dickens novel, the survey found those on higher incomes tend to be more positive about the economy than those who are struggling, Mr Hughes said.
Although the rate of inflation is moderating and interest rates are falling, consumer prices continue to increase while the cumulative pressure of the “sharp and sustained rise” in living costs in recent years is weighing on the finances of consumers on modest incomes and those with big commitments.
But with household incomes now increasing faster on average than inflation, the December survey also finds that consumers are less fearful about the prospects for their finances in the year ahead.
The index, compiled in partnership with Core Research, showed a reading of 73.9 in December, down marginally from the 74.1 reading posted in both October and November.
Sentiment remained subdued, with the December number “well below” the long-term average for the index. But the latest reading also marks a brightening in the consumer mood compared to December 2023.
“It is encouraging that the December sentiment survey suggests consumer spending plans are continuing to improve as household finances are expected to recover in 2025,” said David Malone, chief executive of the Irish League of Credit Unions.
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The survey was conducted during a period in which economic data suggested continuing solid gains in activity and employment, but it also coincided with commentary emphasising “large and looming” downside risks to the Irish economy and the public finances under a second term for US president-elect Donald Trump.
“Against this backdrop, it might be argued that the performance of the ‘macro’ elements in the December survey is notable in that the weakening in Irish consumers’ expectations for economic activity and jobs over the next 12 months was relatively modest, with both elements remaining above their 2024 averages,” Mr Hughes said.
Opinion was divided on the question of whether “far away fields look more glittering” this Christmas. Some 30 per cent of consumers said they thought conditions were better in the Irish economy than in other advanced economies, while 31 per cent believed they were worse.
The most striking aspect of the answers, Mr Hughes added, was that men were almost twice as likely to say the Irish economy compared favourably to other countries and women were nearly twice as likely to say it compared unfavourably.
The variation may be linked to differences in respondents’ incomes, while the perception that there is better social provision in other countries, as well as better access to affordable housing and childcare, could also be a factor in the more negative verdicts.
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