Shoppers busy but still cautious

CONSUMER confidence bounced back last month after slipping in February, according to a new survey by the Economic and Social Research Institute (ESRI) and IIB Bank.

The monthly consumer sentiment index regained most of the previous month’s losses, largely thanks to renewed optimism on the jobs front.

IIB Bank economist Austin Hughes said the rebound in consumer sentiment contrasted with falling confidence levels in America, France and Germany. But consumers were still relatively cautious in their spending plans, he added.

“While the IIB/ESRI consumer sentiment index is rising, the recent pattern suggests consumers remain fairly cautious. In spite of relatively subdued inflation, substantial increases in some areas of living costs are a significant issue because wage increases are not dramatic,” Mr Hughes said.

The survey found people were more willing to borrow for selective purchases, such as houses and cars. The buoyant housing market was also seen as contributing towards strong sales of furniture, lighting and DIY materials. But the car market appeared to be boosted by motorists trading in ahead of schedule, to make the most of current resale values before an anticipated price tumble caused by the end of the Government’s Special Savings Incentive Account (SSIA) scheme.

The scheme, which matures from next May, is expected to add €14 billion to consumers’ wallets over a 12-month period. Most economists predict a spending spree on cars, holidays and home improvements.

ESRI economist David Duffy said the improvement in overall sentiment was broadly balanced between consumers feeling better about the current environment and a more positive outlook on the future.