Irish consumer sentiment drops as Covid cases surge again

Irish consumer sentiment dropped to a seven-month low in November as Covid cases surged again.

The re-emergence of Brexit worries and higher living costs – particularly in relation to energy and housing – were also cited as factors in the latest KBC Bank Ireland consumer sentiment index.

The main index declined to 83.1 in November from 86.8 in October.

While the monthly drop was not large by historic standards, KBC Bank said it was the largest monthly fall since January, and brings the sentiment index to its lowest level since April.

Rising inflation cited as factor in fall-off in November Irish consumer sentiment

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“As such it points towards a change in thinking encompassing some increased nervousness on the part of Irish consumers,” KBC’s chief economist Austin Hughes said.

The weakest elements of the survey for November were in relation to the outlook for the economy and jobs.

“These had been the strongest areas in the October survey reflecting a range of positive forecasts and reduced concerns about changes to the global tax framework at that time,” he said. “Through the November survey period the ‘macro’ headlines were notably gloomier as there was a significant focus on the scale of problems in Ireland’s housing market as well as broader concerns about sharply rising living costs.

"It should also be noted that the softening in these elements of the index stemmed principally from a drop in those expressing positive views rather than a surge in those citing negative views on the outlook for the economy and jobs," Mr Hughes said.

“We also think the emerging fourth wave in Covid cases was an important factor weighing on the mood of Irish consumers of late as speculation about the reimposition of health-related restrictions became more widespread during the November survey period,” he said.

Energy costs

The survey noted that rising rates of inflation also weighed on consumers. Irish inflation shot to a 14-year high of 5.1 per cent last month as rising energy costs, supply shortages and increased consumer demand drove up prices.

Preliminary US data show a decline in sentiment to a new 10-year low this month while recent months have also seen marked softness in similar euro area and UK confidence metrics.

Separately, Irish consumers are expected to spend over €25,000 a minute during Black Friday, according to a new AIB forecast.

Clothes are expected to be the most popular purchase on the day, with some €8,000 per minute spent buying items online this Friday, up 232 per cent in volume terms compared to daily averages.

This equates to more than 135,000 transactions on clothing websites. On a normal day transactions would total around 40,000 purchases.