A recent survey indicates an upturn in consumer confidence in June, countering a succession of past months where confidence was on the wane. This shift in attitude is chiefly attributable to households having a more optimistic perspective on their financial situation due to declining energy and food costs. The Irish League of Credit Unions’ consumer sentiment index for this month managed to recoup just above half of the total losses registered through four consecutive monthly falls, between January and May, as indicated by economist and the report’s author, Austin Hughes.
Nonetheless, with the index reading in June still lingering at 70.5, a marked difference from the long-standing average series of 84.5, he highlighted that households continue to worry about living expenses. The overall enhancement in consumer sentiment is propelled by upbeat attitudes towards household finances, driven by a multitude of factors, as per Mr Hughes.
Primarily, June saw a decrease in the costs of automobile fuel subsequent to sizeable augmentation in the early phases of 2024, he noted, prior to the onset of the summer travelling period. Additionally, data released by the Central Statistics Office point towards a slackened inflation rate of food prices during this month. June also marked the announcement of the initial interest rate cut by the European Central Bank (ECB).
Mr Hughes underscored the significant amplification in media discussions in June about the likelihood of a ‘giveaway’ budget in the autumn, prompted by the imminent general elections and the solid recent tax returns. However, the cost of living crisis goes on to burden consumers’ minds, as per the survey. Despite households amplifying their spending plans, Mr Hughes noted that there exists little indication of economic and financial tensions subsiding to the extent that a significant increase in spending can now be expected.
The survey also reflected that about 40% of households stated their income surpassed their expenditure during the survey period, while a quarter of participants reported their current income is insufficient to cover their spending.
Despite a decline in energy prices on a wholesale level over the last year, energy bills continue to pose the most substantial challenge to consumers, as per the survey results. Mr Hughes asserted that this finding is entirely in line with the trend of increasing energy prices in recent times. Despite a notable recent reduction in energy prices, the average expenses for energy products consumed by Irish households in May 2024 were 43.7% higher than in May 2021.
Despite the national economy faring well, households continue to face considerable pressure, and the overall sentiment remains pessimistic, as stated by Mr Hughes.
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