The latest edition of IBEC's ‘Irish Consumer Monitor’ bulletin has predicted a marginal increase of 0.2 per cent on the average consumer spending power of Irish households, with slightly stronger growth of 0.7 per cent forecast for 2014.
While mortgaged working households will see the greatest gain in spending power – an estimated 1.4 per cent in 2013 and 2% in 2014 - many costs such as health are expected to rise again in 2013.
Interestingly, IBEC argues that ‘many observers have overstated the impact of the local property tax’ but acknowledges that such ‘an emotive issue’ may leave a negative impact on consumer confidence.
Encouragingly, the IBEC report notes ‘Overall, many of the fundamentals for the domestic economy are now stabilising’, pointing to the fact that the private sector began to add jobs during 2012. IBEC added that ‘It is likely that, in the absence of further bad news, consumer sentiment should recover during 2013.’
"The main cause of the unemployment crisis is the lack of consumer confidence and weak domestic demand," said Reetta Suonperä, IBEC Senior Economist. "Getting people back to work is the priority, but to do this we need a return to more normal, sustainable consumer spending levels. Consumer fundamentals have now stabilised and the promissory note deal could provide real momentum to consumer confidence.
"The private sector began to add jobs during 2012, a tentative bottoming-out of house prices means that household net wealth is no longer falling and debt levels are starting to ease, albeit from high levels."