Consumer confidence still high despite February dip

A drop in positivity on household finances led to a marginal dip in consumer mood in February, but it wasn’t enough to signify any major loss of confidence, according to a survey.

The February edition of the monthly consumer sentiment index, from KBC Bank Ireland and the ESRI, shows a reading of 105.8, down from the 15-year high measure of 108.6 noted in January.

“It is often the case that the sentiment index weakens in February as the arrival of post-Christmas bills prompt a scaling back of spending intentions. Moreover, at a time of significant uncertainty worldwide, it is scarcely surprising to see a partial correction of January’s gains,” said Austin Hughes, chief economist at KBC Ireland.

“For these reasons, we would not regard the drop in sentiment in February as particularly surprising or alarming. We would also emphasise that at current levels the sentiment index is comfortably above its long-term average level of 86.1 and all five main elements of the survey reported more positive than negative responses,” he added.

Mr Hughes said the lower February reading suggests caution rather than any major erosion in confidence among Irish consumers but said the “surprising” drop in outlook for household finance strength “hints that Irish consumers worry the uncertain environment will weigh on their income prospects” and suggests people are “very much atuned to a range of factors constraining the economic upswing as it applies to them”.

The latest data he said, “hints at an Irish consumer who is focused, at present, on the many uncertainties that might weigh on their living standards and, as such, altogether more conscious of the risks rather than the recovery at present”.

Irish consumer mood still outweighs the broader eurozone’s which last month showed its largest monthly fall in three-and-a-half years and hit its lowest index reading since December 2014.

“Although consumers in the single currency were slightly more nervous about their own financial circumstances last month, the key development was a sharp deterioration in their assessment of the general economic outlook,” Mr Hughes said.