Consumers to keep ‘tight reins’ on Christmas spend

Spending this Christmas and New Year will be buoyant but will unlikely be much greater than year-ago levels, according to the latest survey by KBC Bank Ireland and the Economic and Social Research Institute (ESRI) of consumer plans, writes Eamon Quinn.

The survey found that consumer confidence dipped last month probably affected by the threat Brexit poses for the economy, as well as the rail dispute, even though households were more positive about their finances over the past year.

October’s budget helped boost people’s feelings about their personal finances but concerns about the wider economy were weighing on their views of the year ahead, said Conor O’Toole at the ESRI. 

That means that the prospects for a large spurt in spending over the next few weeks is limited.

“While there is a general sense of confidence in Irish economic prospects and that the worst is over in terms of household finances, the survey implies that tight reins are being kept on family finances,” said Austin Hughes, KBC Ireland’s chief economist.

“This implies that the typical consumer is likely to take a cautious rather than carefree approach to their spending over the Christmas period.

"Importantly, while the survey hints the average consumer may not spend much more, strong population and jobs growth means there are notably more people spending than 12 months ago,” he said.

Although the overall confidence reading slipped in November, components of the survey were much healthier.

Consumers were more confident when asked about their plans for making large purchases compared with their intentions a year ago.

However, they were slightly less confident about the outlook for unemployment and the general economic situation in November from October.

The consumer sentiment chimes with the survey on Christmas spending plans by Ibec’s industry group Retail Ireland published earlier this week.

It projected that Christmas consumer spending would reach €4.5bn this year, an increase of 2.6% from a year ago.

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