SENTIMENT:CONSUMER SENTIMENT edged lower last month, as a European Central Bank interest rate rise and a weakening global outlook offset the seasonal confidence-boost provided by summer sales.
The July reading of the KBC Bank Ireland-ESRI Consumer Sentiment Index was marginally lower at 55.9, down from a value of 56.3 in June, and 66.2 in July 2010.
This decline comes after recent euro zone data indicated that sentiment in the area had been dented by the sovereign debt crisis, while US consumer spending unexpectedly dropped for the first time in almost two years in June.
Austin Hughes of KBC Ireland said it wasn’t surprising that sentiment weakened in July, as the Irish consumer was “bombarded” with bad news on several fronts.
In July, the ECB raised interest rates 25 basis points to 1.5 per cent, which had negative implications for household spending.
Mr Hughes said that while heightened concerns about a Greek default, or a possible breach of the US debt ceiling, may have seemed “remote” to Irish householders, consumers have become sufficiently familiar with financial market signals to know when something “is likely to mean bad news for them”.
The overall consumer sentiment index was buoyed by an improvement in the perception of current conditions, which in turn reflected the view that July was a good time to purchase major items due, in part, to summer sales.
Mr Hughes noted that while the mood of consumers remains off the lows of July 2008, sentiment is still fairly weak.
