Irish consumer confidence slipped marginally in July from the two year high recorded in June, research showed.
Although the weather was exceptionally good as the survey was collected, consumers seem to be increasingly conscious of some gathering clouds in the economic sky.
According to the latest KBC Bank Ireland Consumer Sentiment Index, an uncertain economic outlook coupled with growing inflation fears, together with practical issues around the ‘opening up’ process and increasing nervousness about the Delta variant of the Coronavirus, appear to have combined to make Irish consumers a little more cautious about the outlook both for the economy as a whole for their own household finances.
"A ‘pause for breath’ after five months of increasing consumer confidence is not entirely surprising and the scale of pull-back in the sentiment index is relatively modest," commented Austin Hughes of KBC.
"As a result, we would not interpret the July reading as signalling a notably darker mood among Irish consumers. While we don’t think the July sentiment data suggest Irish consumers have become notably more risk adverse, it does suggest they remain very much risk aware."
Hughes noted that the softer July survey hints that a broadly based ‘feel-good’ factor is still lacking among Irish consumers and exceptionally fine weather hasn’t mechanically translated into sunnier forecasts for the economy and consumer purchasing power.
"So, we continue to see consumer spending rising rather than roaring in 2021," Hughes added.
The survey indicated that the most notable weakening in Irish consumer confidence in July related to the economic outlook.
While the tone of most economic commentary remained positive of late, a number of concerns have attracted increased attention of late and may have weighed on consumer thinking in relation to the Irish economy.