Irish consumer sentiment dips ahead of the Budget

Shoppers aren't feeling too jolly as we move into the long festive run in...

Irish consumer sentiment dips ahead of the Budget

Grafton Street, Dublin Photo: Wikipedia Commons

Irish consumer sentiment has dipped as concerns grow about the future outlook for the Irish economy.

The KBC Bank Ireland/ESRI Consumer Sentiment index fell to 102 - down marginally from 102.7 in August.

The economic measure hit a 15-year high of 108.6 in January - since then it has hovered closer to 100. No two consecutive readings in the last six months have gone in the same direction.

The index slipped to 99.6 in July, after the UK decided to leave the EU. 

The ESRI notes that the European Commission's ruling concerning Apple's tax payments in Ireland has increased uncertainty about the country's future economic prospects and damaged consumer sentiment. It created a new "unknowable unknown" according to the ESRI. The CSO's reporting of 26% economic growth in 2015 also unnerved consumers.

"The drop, albeit marginal, in Irish consumer sentiment in September was at odds with developments in comparable sentiment measures for the US and the euro area as a whole, while in the UK consumer confidence posted a notably stronger than expected gain to recover all of the ground lost in the wake of the Brexit vote," the report notes.

Positive views on the economic outlook outnumber negative ones by more than two to one. However, the September survey saw the share of consumers who expect the Irish economy to weaken in the next twelve months rise to the second highest level since mid-2014.

Commenting on the results research assistance Daniel Foley from the ESRI said:

"Consumer sentiment has fallen moderately this month, suggesting that consumers are feeling cautious, particularly in relation to future economic conditions. The results for the main index show that the upward trend observed over the last year has begun to level off in recent months indicating that consumers are becoming more aware of the downside risks facing the economy."

"The dis-improvement in consumer’s expectations this month is being driven mainly by falling sentiment in relation to the general economic climate and future employment prospects. The component relating to future unemployment fell by 2.3 index points this month."

Retailers will hope that the draw of the festive period will override this consumer uncertainty.