Falling energy prices and announcements of grocery price cuts have boosted consumer sentiment at the beginning of 2024, according to the latest Credit Union Consumer Sentiment Index.
The survey of 1,000 adults conducted from the 4-19 January puts Irish consumer confidence at its highest level in almost two years.
It found that though the Christmas switch off from economic and financial news coverage contributed to a seasonal bounce in sentiment, Irish consumers sense conditions are improving while still being cautious about the future.
In an analysis of the findings, which show consumer sentiment rose from 64% in December to 74% in January, economist Austin Hughes noted that the survey period saw “a continued drop in oil prices, a spate of announcements of reductions in electricity and gas charges, supermarket price cuts and speculation about ECB (European Central Bank) interest rate cuts this year”.
He also stated that it is not surprising to see an improvement in sentiment “with increased tax credits and social welfare rates coming into effect and the payment of two €150 electricity credits in December and January”.
The survey found 40% of respondents expect their household income to be stronger in five years’ time, up from 35% last year.
The percentage expecting income to be weaker declined 4% to 23%.
However, the percentage of respondents who believe the Irish economy will be stronger in five years’ time declined from 39% last year to 35%.
The number that thinks it will be worse also declined, while those saying it will be about the same rose from 19% to 27%.
David Malone, CEO of the Irish League of Credit Unions, said: “The sharp improvement in Irish consumer sentiment in January suggests many consumers expect an easing in cost-of-living pressures and some increase in their incomes in the year ahead.
“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.”
However, the survey also suggests consumer sentiment could easily change in the short term.
Mr Malone said: “It would not be surprising to see some pull-back in sentiment in the coming months as a difficult global outlook comes into focus, Christmas spending bills bite which serve to emphasise continuing pressure on the finances of Irish households.”