Consumer confidence drops, driven by Covid concerns
Irish consumer confidence dropped again in December, as concerns around Covid-19 and the cost of living intensified.
The KBC Bank consumer sentiment index dropped to 74.9 from 83.1 in November – its weakest reading since February, indicating a clear deterioration in the mood of Irish consumers.
December saw the third largest monthly fall since the pandemic struck.
“While altogether more measured than the precipitous decline of 34.7 seen in April 2020, the December change suggests Irish consumers are bracing themselves for a difficult period to come,” said Austin Hughes, KBC Bank Ireland’s chief economist.
Mr Hughes said there are four factors that may have added to the increased level of nervousness among consumers.
The first two of these are health considerations.
“The first being the likelihood that consumers have been unsettled by the speed of emergence of the Omicron variant allied to the degree of uncertainty as to its medical impacts,” Mr Hughes said.
“A second related consideration likely weighing on Irish consumer sentiment is the potential for a recurrence of the intensity of problems seen in the wake of the emergence of the so called ‘UK variant’ of Covid-19 at Christmas time a year ago,” he added.
Mr Hughes said the rising cost of living and concerns around the impact new Covid-19 restrictions could have on employment are also feeding into the lower sentiment reading for December.
“The sharpest decline-by some distance-in the details of the December sentiment survey is in relation to the outlook for jobs,” Mr Hughes said.
All five main elements of the KBC Bank consumer sentiment survey weakened in December.
The best performing elements of the December survey were consumer views on how their personal finances would evolve in the next 12 months.
“Resilience in these areas suggests that while Irish consumers may be down, they are not out,” Mr Hughes said.