Consumer confidence up slightly

Consumer confidence has risen for the first time since January as falling oil prices and the summer sales helped ease concerns about the global credit crunch.

Despite the monthly rise, the IIB/ESRI consumer sentiment index found confidence has almost halved since this time last year overall.

Austin Hughes, IIB chief economist, said the mood among consumers was still gloomy.

"It is too early to suggest sentiment is stabilising but the fact that Irish consumers responded favourably to price discounting in the summer sales, falling oil prices and less threatening news on interest rates means they haven't entirely given up the ghost," he said.

"The key question is whether the news over the next few months is going to get worse or better.

"While the improvement in consumer spending in August is very welcome it should be emphasised that current survey readings are still suggesting a fairly gloomy mood that is consistent with very subdued levels of spending."

Between mid-July and mid-August the price of a barrel of Brent crude oil dropped from just below US$147 to just more than US$113, reversing most of the price hikes seen since late April.

Economists believe the combination of plummeting oil prices, the summer sales and fading fears of interest rate hikes have led consumers to believe the economic outlook may not be as bleak as first thought.

The Index rose to 43.4 in August from a record low of 39.6 in July.

The rise was the first since January.

While both bodies welcomed the boost in confidence they warned it should not be seen as a turnaround.

"Much of the improvement can be attributed to a more positive perception by consumers of the current buying climate," said David Duffy, economist with the ESRI.

"This may well reflect the impact of the summer sales.

"Although sentiment has improved, the underlying figures suggest that any recovery in confidence remains tentative."

The consumer sentiment index survey was compiled via telephone interviews with around 800 people during the first two weeks of the month.