Irish consumer sentiment tumbled in March, as the tragedy unfolding in Ukraine and the related economic and financial fallout facing Ireland struck a very gloomy note with Irish consumers.
The March KBC Bank Ireland Consumer Sentiment Survey showed a sharp worsening of the general economic outlook, and a similarly large weakening in consumers’ thinking on the prospects for their own household finances.
Austin Hughes of KBC Bank, who conducted the survey, pointed out that the sharp downgrade to the outlook for the Irish economy is entirely understandable.
“Only one in eight now see the Irish economy strengthening in the next 12 months – about half the number that expected this in February – while the number expecting the economy to weaken increased from one in two consumers to two in three,” Hughes said.
“Although this represents a substantial change in thinking, it remains markedly less negative than the near universal expectation of economic weakness that was seen in the sentiment survey when Covid-19 first struck.”
Higher Inflation Impact
According to the survey, the most powerful negative influence on spending at present is higher inflation, with just under half (46%) of consumers citing increased energy and other costs as a constraint on their spending, and the majority of these (27% of overall responses) signalling a significant adjustment.
“So, the hit to spending power is the main factor likely to weigh on Irish consumer spending in 2022,” Hughes added.