Irish consumer sentiment lifts with easing of pandemic fears

Irish consumer sentiment lifted in January as concerns about the severity and duration of the pandemic eased.

The latest KBC Bank Ireland consumer sentiment index contrasted with similar survey in other countries.

“This reflects greater earlier caution on the part of Irish consumers, but it also likely owes something to increasingly positive commentary on the outlook for the Irish economy,” said KBC Bank Ireland chief economist Austin Hughes .

The lender’s sentiment index increased to 81.9 from 74.9 in December, reversing the sharp drop last month from the November reading of 83.1.

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"Our sense is that the turnaround was helped notably by very encouraging end-year exchequer returns and unemployment data released early in January that highlighted the exceptional resilience of economic activity and the jobs market," Mr Hughes said.

At current levels Irish consumer confidence is still marginally below the long-term (26 year) average of the series.

“So, it still speaks of a reasonably cautious Irish consumer but, importantly, one who is not insensitive to emerging positive developments,” Mr Hughes said.

The survey was conducted before the lifting of restrictions in late January and in advance of a positive report on the economy by the Central Bank of Ireland, suggesting there is scope for further improvement.

Household finances and spending elements of the survey suggest consumers will spend more in 2022, but outlays are likely to be measured rather than “manic”, Mr Hughes said.

As part of the latest survey KBC asked consumers about their outlook for economy, household incomes and property prices. It found nearly half see the economy getting stronger but almost one in four see weakness.

Consumers outside Dublin, female consumers and those under financial pressure were “more cautious on economic prospects”, it found.

Expectations for household income varied according to age, with a majority of consumers over 55 expecting their income to be lower in five years’ time.

On house prices, roughly seven in 10 consumers expect Irish house prices to be higher in five years.