Jack Quann
Jack Quann

10.30 8 Jul 2019


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Irish consumer sentiment edged marginally higher in June, with people being more optimistic on the economy.

This was the first back to back gain the KBC Bank Ireland consumer sentiment index saw in two years.

It says news flow on the Irish economy remained positive and Brexit risks, while still substantial, may have seemed slightly less immediate as the race to become the next leader of the UK Conservative Party began.

The consumer sentiment index rose to 90.7 in June from 89.9 in May.

It says this relatively small increase suggests there was no major change in the mood of Irish consumers last month.

consumer sentiment Source: KBC

But it is notable that this is the first time it has seen back to back monthly improvements since mid-2017.

The Euro Area and the UK all weakened notably in June, but KBC says Irish consumer confidence was boosted by domestic influences.

Austin Hughes, chief economist at KBC Bank Ireland, explains.

"The first is that, given the significant weakening in Irish consumer sentiment since last summer, consumers here may feel that they have now priced in as much personal pain as they might reasonably expect from a still very uncertain Brexit process.

"For most of the past year, Irish consumers have been bracing themselves for damaging fallout from an imminent UK crash-out from the EU. However, it still remains unclear exactly how or when Brexit might occur.

"A renewed focus on the risk of a 'hard Brexit' from October 31st may see sentiment sour again.

"However, in the near term, an element of Brexit fatigue may be causing consumers to switch attention away from such risks to the reality of healthy Irish economic conditions at present."

He says a second influence may be a continuing set of positive Irish economic data, which recently highlighted strong jobs growth and solid wage gains.

They suggest a "significant counterweight" to the threat posed by Brexit.

consumer sentiment A view of Dublin city centre from the River Liffey | Image: Christian Charisius/DPA/PA Images

Consumers were also somewhat more positive as to how their own household finances had developed in the past 12 months.

This means spending plans improved slightly, even though some Brexit-related nervousness is hinted at over the next year

Mr Hughes also suggests we might see a slight pick-up in household spending through the summer months, as consumers take a brief 'holiday' from Brexit worries.

consumer sentiment Source: KBC

In such circumstances, he says, household spending might step up to a pace consistent with stronger gains in household incomes of late.

The June sentiment survey also found that estimated cost of living changes varied significantly by age group.

Those under 35 are reporting an average rate of 1.3%, those aged between 35 and 54 are reporting a figure of 1.9%, and those aged 55 and over are signalling that their cost of living had risen by 2.5%.


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