A surge in online spending by Irish consumers in recent months has covered a significant slowdown in consumer spending over the same period, according to the latest Visa Irish Consumer Spending Index.
The figures show that, while year-on-year spending grew by 3.6% in December, the rise was the slowest recorded since the index was launched more than two years ago. Within the overall growth, online spending rose by more than 15% while spending in shops actually fell by 0.3%.
The report says the sterling exchange rate is leading shoppers to purchase from UK online retailers.
Visa's Philip Konopik from Visa says Irish shopping habits are changing:
"Consumers will go and browse and shop on the high street but a lot of the actual decisions tend to happen online more and more, particularly for bigger purchases. Consumers are becoming increasingly more confident in purchasing goods and more expensive items."
Meanwhile, KBC's end-of-year report found that consumer sentiment is at its lowest level since 2015. A modest monthly decline was enough to push sentiment to a 22-month low, with the majority of Irish consumers believe the economic recovery was over promised and under delivered in 2016. Some 75% of respondents stated that the recovery had delivered no material financial benefit for them.
The KBC Bank Ireland consumer sentiment index slipped to 96.2 in December from 97.8 in November.
The report states that we're now extremely cautious about spending and are worried about the negative impact of Brexit and Trump for the year ahead.
It reads:
"The drop in consumer sentiment in December neatly captures the sense of a year that failed to live up to expectations for many Irish households. The details of the survey are consistent with an Irish economy that is continuing to grow but one where that growth is uneven and has not repaired many of the losses suffered through the preceding downturn.
The December survey is not pointing to a dramatically poorer economic outlook but to a sense of detachment from extremely strong conventional economic metrics of recent years and concern about an increasingly uncertain future. The perception that the economic recovery to date has not been sufficiently inclusive and that the persistence of that recovery may be less certain in the year ahead means that the predominant mood captured by the consumer sentiment survey at present is a ‘feeling of missing out’."
KBC economist Austin Hughes said of the study:
"I think the key finding in the report is that the average Irish household feels they didn't benefit from the very strong economic conditions that they were hearing about constantly through the year.
So the sentiment survey is saying that people feel they've missed out on the recovery and they're more nervous that the recovery may be threatened by Brexit and Trump in the year ahead."
