Consumer confidence has fallen to a three-year low, figures published yesterday indicate. Despite an expected boost from maturing SSIA savings, consumers feel less confident about their future than at any time since December 2003.
The overall IIB/ESRI index of consumer sentiment fell to 78.5 in March, down from 84.9 in February and around 90 at the start of the year.
Consumers remain positive about their financial situation, largely as a result of the lingering effect of Budget concessions, the survey's authors suggest. However, looking to the future, the "feel-good factor" is fading as interest rate rises and job loss fears mount.
The index of "current economic conditions" in March was 98.1, modestly down on February's reading of 100.4, but the "expectations index", tracking how consumers feel their financial situation will change in the year ahead, fell to 65.4 compared with 73.8 in February.
ESRI economist David Duffy attributed this decline to rising fears about the labour market. "Announcements of job cuts and plant closures have had a particularly strong impact," Mr Duffy said.
IIB chief economist Austin Hughes said that consumers were looking at the economy through "dark-tinted glasses", in part due to the European Central Bank's decision last month to raise interest rates again. "It is scarcely surprising that a 'feel-bad factor' is becoming established among Irish consumers in spite of the substantial support to spending power provided by a generous budget and the maturity of the bulk of SSIA accounts," Mr Hughes said.
But he says the dip of confidence will not harm the economy. "Rapid population increase means aggregate household spending should remain reasonably healthy."