Consumer sentiment declines slightly amid layoffs and sticky high costs, survey shows

Sentiment has fallen between January and February in eight of the past 10 years, according to the survey. Picture: Stephen Collins/Collins

Consumer confidence declined slightly in recent weeks as the tight labour market casts doubt on job opportunities and stubborn costs continue to bite, according to a new survey.

The ongoing slowdown in the tech sector which has led to more layoffs already this year in addition to health insurance costs, a rise in fuel prices and a vague roadmap for when the European Central Bank (ECB) will cut interest rates have contributed to pressure on household finances, according to the Credit Union Consumer Confidence Index for February.

Economist Austin Hughes said household incomes are expected to rise faster than inflation this year, but the cumulative hit to living standards over recent years and sticky high prices may “constrain the likely pace of increase in overall consumer spending in the Irish economy this year” even as inflation retreats.

The survey also suggested that the fall in sentiment could be linked to an historically difficult time for households after Christmas, as finances stabilise after seasonal splurging, instead of being driven by an inflationary environment and geopolitical factors.

Sentiment has fallen between January and February in eight of the past 10 years, according to the survey.

Meanwhile, the survey showed that some Irish consumers continue to save despite cost pressures but this habit is more common among those on higher incomes.

Roughly 34% of respondents said they save regularly while a further 27% said they save occasionally. Another 32% said they are unable to save.

Dublin consumers signalled greater savings capacity than their counterparts in the rest of Ireland while slightly greater savings capacity was indicated by male respondents than by females.

Many of those consumers who indicated they have been saving suggested that at least some element of this was in the form of paying down various forms of debt including mortgages, credit cards and overdrafts.

The survey said it is likely that consumers see reducing loan balances as a means of “building a financial buffer against unexpected unfavourable developments”.