Consumer sentiment recovers slightly in May as energy cost concerns ease

Economist Austin Hughes said the improvement in consumer sentiment in May could reflect two different developments — a ceasefire in the Middle East and the Irish Government introducing supports in response to the global energy crisis

Economist Austin Hughes said the consumer sentiment survey still points to a 'nervous Irish consumer who sees Irish economic conditions and their own household finances now set on a weakening path'. 

Irish consumer sentiment recovered slightly during May as Government energy supports eased energy prices and the conflict in the Middle East receded, but the survey results still “point towards a consumer facing significant cost-of-living challenges as well as elevated economic uncertainty”.

According to the latest Credit Union Consumer Sentiment Survey, the Irish consumer sentiment index recorded a reading of 59.4 this month — up from 53.3 recorded in April.

Despite this being still well below the long-term average of 83.3, it is broadly similar to the 60.6 average reading for the 12-month period from May 2025 to April 2026.

Economist Austin Hughes, who wrote the analysis of the survey results, said this suggested the “difficulties facing Irish consumers at present are not altogether more severe now than those they have faced for some time”.

Mr Hughes said the improvement in consumer sentiment in May could reflect two different developments — a ceasefire in the Middle East and the Irish Government introducing supports in response to the global energy crisis.

“The May sentiment survey still points to a nervous Irish consumer who sees Irish economic conditions and their own household finances now set on a weakening path. However, the slight uptick this month suggests that this deterioration may be less devastating than previously feared,” Mr Hughes said.

“Irish consumer sentiment improved in May but continues to point towards a consumer facing significant cost-of-living challenges as well as elevated economic uncertainty,” Mr Hughes said.

All five elements of the consumer sentiment survey showed month-on-month gains in May. There were three elements of the survey that focussed on household spending power, all of which improved, but their “readings show greater weakness now compared to either the pre-war in Iran level of February”.

“The smallest month-on-month improvement in the sentiment survey in May came in relation to consumer thinking on how their personal financial circumstances had changed over the past 12 months,” said Mr Hughes, adding with inflation returning to an over two-year high “the average Irish household’s buying power is likely to be materially lower than that of a year ago”.

As part of the survey, participants were asked questions focussed on Irish households’ capacity to weather a financial emergency, particularly how would they manage an unexpected emergency costing €1,000?

The most common way households would handle this emergency would be to draw down savings, cited by 40%, while 14% said they would borrow money either through a credit union or bank loan, or resort to credit cards.

A significant 13% of Irish consumers say they would be unable to cope with a financial emergency costing €1,000 in 2026.

“While the 13% share of Irish consumers who now say they could not handle an emergency costing €1,000 is lower than the peak 17% share reported in 2023, it still represents a higher share than the 7% of consumers who said they would be unable to handle a financial emergency costing €1,000 in the 2021 survey,” Mr Hughes said.

“In that respect, these results suggest continuing strains on household finances in Ireland from the recent cost-of-living crisis.” 

Mr Hughes added given the rise in consumer prices in recent years, the “real” cost to Irish consumers of a financial emergency costing €1,000 in 2026 is materially lower than a €1,000 emergency in earlier years.

The inflation-adjusted value of a bill for €1,000 today would be a bill for just under €1,100 in 2023 and €1,250 in 2021.

Roughly one in four Irish consumers might be considered to be "clinging on". This grouping includes those who say they could not handle a financial emergency at present, as well as those who would resort to borrowing from a lender other than a bank or credit union and those who would sell something,” Mr Hughes said.

The survey was based on the responses from 1,000 Irish adults, conducted by Core Research.