Irish consumer sentiment improved fractionally in July as holidays and summer sales likely encouraged a pick-up in spending plans, research shows.
However, a slight pull-back in household financial circumstances suggests consumers remain cautious, implying restrained rather than runaway spending in the months ahead.
Overall, the tone of the survey suggests that the pressures facing Irish consumers are fading but far from finished, according to the latest Credit Union Consumer Sentiment Index (in partnership with Core Research).
The details of the survey also give a strong sense of an Irish consumer still being buffeted by strong economic and financial cross-currents in a very uncertain world.
The July survey saw month-on-month increases in two of the five key elements of the index following declines in these elements in June while the three remaining elements that weakened in July had all seen monthly gains in June.
"The July survey saw a modest improvement in consumer thinking on the broad economic outlook," noted the Index author Austin Hughes.
"The survey period saw the publication of strong mid-year Exchequer returns and the Government’s Summer Economic Statement both of which heightened expectations of significant increases in public spending and income-supporting tax adjustments in the upcoming Budget."
"In contrast, consumers were a little more cautious on the outlook for the jobs market in July. This could have been prompted by continuing concerns around the ‘Tech’ sector as well as the closure of Tara mines."
A Little More Negative
Irish consumers were a little more negative about their household finances in July, both in terms of their recent experience and prospects for the year ahead.
"Although inflation has continued to ease, the annual rate of 6.1% reported for June suggests cost-of-living pressures remain substantial," he added.
"Moreover, a sequence of sharp increases in ECB interest rates is now adding an important additional source of pain and problems for a range of households."
The details of the official inflation release for June saw package holiday prices up 43.2% year-on-year, airfares up 34.2% and domestic accommodation costs up 13%.
Increases of this magnitude would undoubtedly put a significant hole in the holiday spending power of Irish consumers and could have adversely affected their assessment of their own financial circumstances.