CONSUMER SENTIMENT weakened further last month as higher taxes, job losses and economic uncertainty dampened consumers’ moods.

The KBC Ireland/ESRI Consumer Sentiment Index declined from 46.8 in April to 45.5 last month, a 6.76 per cent fall from May last year.

Consumers’ view of their future financial situation, the economic outlook and employment expectations also dipped, with the expectations index dropping from 27.7 in April to 23.8 last month.

Austin Hughes from KBC Ireland said Irish consumers felt worse off than Americans with indicators there showing a recent surge in confidence.

“If you compare the mood of Irish consumers in May to similar surveys for other economies, it is fairly clear that powerful ‘feel bad’ forces are at work here.

“In the US consumers feel the worst of the news on jobs and the economy may be behind them and they’ve also been buoyed by rising share prices . . . In Europe unemployment hasn’t really taken off as yet,” he said.

“In Ireland, however, widespread job losses, lower after-tax incomes and great uncertainty about economic prospects are clearly weighing on sentiment.

“If anything, the surprise is that consumer sentiment isn’t lower than the May survey indicates.”

However, people’s perception of their current situation was bolstered by widespread price discounts amongst retailers with that index surging to 77.7 from 75.1 in April.

Mr Hughes said this indicated the public was prepared for the difficulties of an ongoing recession.

“Irish consumers have been preparing for poorer economic conditions for more than three years.

“The May sentiment results, together with signs of a pullback in spending, an increase in saving and a sustained effort to reduce debt, suggest that for many the adjustment to tough times is well advanced.”