Falling energy and shopping basket prices fuel confidence

A FURTHER drop in the cost of living has fuelled economic confidence in Irish consumers, marking a positive start to 2024, a survey has found.

The mood of consumers saw a notable improvement in January as falling energy prices and grocery bill cuts suggested this year could see some reversal of cost-of-living pressures.

Tax data and recent forecasts pointed to a resilient Irish economy while a lengthy Christmas break during the survey period likely prompted a seasonal ‘switch-off’ from economic concerns. Consumer confidence is said to have sharply increased this month to its best level in two years.

The Credit Union Consumer Sentiment Survey found there were ‘grounds to expect’ the improving circumstances will boost sentiment and spending in the months ahead.

But consumer confidence metrics are

‘Cautious in their outlook’

unlikely to see straight-line gains through 2024. Economist and report author Austin Hughes said: ‘It would not be surprising to see some pull-back in sentiment in coming months as a difficult global outlook comes into focus, Christmas spending bills bite and serve to emphasise continuing pressures on the finances of Irish households.’

The consumer sentiment index jumped by almost 12 points to 74.2 this month from 62.4 in December.

This unusually large monthly gain was the strongest since November 2020 when hopes of a Covid-free Christmas sparked a 12.9-point increase.

The survey revealed 40% expect stronger household incomes in five years’ time, but 23% expect incomes to shrink. Some 68% think Irish house prices will be higher in 2029, while just 14% foresee lower property prices.

Irish League of Credit Unions chief David Malone said: ‘While this would mark a clear break from difficulties of recent years, the details of the survey suggest consumers are understandably cautious in their outlook and their spending plans.’