Irish consumer sentiment weakened for the third month in a row in October, according to KBC Bank Ireland/ESRI Consumer Sentiment Index for October 2018.
The consecutive slip comes as worries about the global economy and the risks posed by a hard Brexit, in particular, prompted increased nervousness about the economic outlook and a notably more cautious view of household spending.
However, the report noted that Irish consumers are still ‘broadly positive’ when it comes to their personal finances and the broader economy, although the level of confidence in these areas has slipped of late.
“While overall sentiment has declined in October, consumers are more bullish in relation to the outlook for their own personal circumstances. This may be linked to the modest gains for personal incomes as a result of Budget 2018,” Philip Economides, ESRI, said.
“These factors overall have been outweighed by growing concerns regarding the general economy. Given that the negotiating space of the British government continues to narrow and progress towards a satisfactory Brexit-proposal remain elusive, consumer sentiment is likely to remain subdued until such uncertainties pass.”
The fall in reading from September to October was relatively modest, with the KBC Bank/ESRI consumer sentiment index fell to 93.5 in October from 96.4 in September.
This would suggest, the survey finds, that panic has yet to set in among Irish consumers, however, the sentiment has been steadily falling since July and is the largest drop in sentiment over three months since autumn of 2010.
It highlighted that, as Brexit draws closer, Irish consumer sentiment could see further significant changes in one direction or the other over the next couple of months.
Compared to the US and the Euro area, Irish consumer confidence has not reflected the global outlook as the Euro area’s confidence improved marginally, while as the US sentiment declined somewhat, it is still higher than any other year since 2000.
Ireland’s sentiment drop is not as steep as it’s neighbours in the UK, but that drop only represented a three month low, against Ireland’s 46 month low.
In terms of personal finance, Irish consumers are more marginally more positive, the report found.
It suggested this was a result of the recent Budget which implied the prospect of some marginal improvement in spending power for many households, however, consumers still remain cautious about spending.
“The monthly drop in consumer sentiment in October is relatively modest and suggests panic hasn’t taken hold. However, the continuing decline in October has led to the sharpest three-month fall since 2010 which clearly indicates that Irish consumers have gotten a good deal gloomier of late,” Austin Hughes, KBC Bank Ireland, said.
“The much-increased threat of a ‘no deal Brexit’ among a range of global uncertainties, coupled with rising costs for housing and fuel and, in many instances, household finances still strained from the crisis have all contributed to circumstances where, to borrow a phrase, there is a strong sense from the sentiment survey that winter is coming.”
© 2018 Checkout – your source for the latest Irish retail news. Article by Aidan O’Sullivan. Click subscribe to sign up for the Checkout print edition.