Battle of the Santas to drive consumers

A BATTLE between ‘Good Santa’, Brian Cowen, and ‘Bad Santa’, ECB president Jean-Claude Trichet, will drive consumer sentiment and spending this Christmas.

This is according to the latest IIB/ESRI consumer sentiment index, which said Irish consumer sentiment improved sharply in November, jumping to 94 from 85 the previous month.

The November reading is the strongest since July.

President of the European Central Bank (ECB) Jean-Claude Trichet has been branded a ‘Bad Santa’ because he is set to increase euro zone interest rates later this week.

IIB bank spokesperson Austin Hughes said: “While a rate hike and the promise of more to come will act to damage confidence, a carefully constructed budget package should be sufficient to keep Irish consumer sentiment and spending on an improving trend.”

The survey said that while the November increase is encouraging, it should be remembered that this month’s reading is slightly below the 95.6 year-to-date average and significantly below the long-term average of 102 for the consumer sentiment series stretching back to February 1996.

It added that a big drop in petrol prices, promises of improvements in living standards from a generous budget and the removal of the groceries order were a boost to consumer confidence.

November was also notable for the absence of negative ‘shocks’ to the economy after months of major job losses.

ESRI spokesperson David Duffy said: “The improvement in sentiment is broadly based as consumers have become more optimistic regarding future prospects and current conditions.

“The index of current economic conditions increased to 102.4 from 94.4 in October.

“The forward-looking sub-index, the expectations index, rose to 88.3 in November, from 78.6 the previous month.”

Mr Hughes added: “The sharp rise in consumer sentiment in November probably reflects some easing in concerns about the cost of living.

“While retailers are benefiting hugely from the fact that the numbers of people living and working in Ireland continues to grow rapidly, it is notable that the ‘average’ consumer is still fairly cautious in relation to spending.”