Rising costs see consumer confidence amongst Irish households fall

Households expect consumer prices to increase over the next year

Twenty-seven per cent of households considered it a good time to buy big-ticket items versus almost a third during the summer.

Concerns over the rising cost of living have led to a drop in consumer confidence with Irish households more downbeat about their own financial situation.

The Bank of Ireland economic pulse survey index fell slightly in October but remains significantly above the level recorded in October 2020.

The recent Budget, rising costs and prices, along with emerging doubts over plans to fully lift the remaining public health restrictions made for an uneasy setting this month. 

While business sentiment held steady, consumer sentiment fell by four points.

Households lowered their assessment of the economic outlook and were also more downbeat about their own financial situation. 

The cost of living featured prominently with a further softening in buying sentiment. 

Some 27% of the 1,000 households that were surveyed considered it a good time to buy big ticket items versus almost a third during the summer. 

The share of households expecting consumer prices to increase over the next year rose to a series high of 85%.

“The October Economic Pulse presents a mixed picture. Consumers were more hesitant this month, with various worries, not least increases in the cost of living and the rise in virus cases, taking the shine off households’ mood," Dr Loretta O’Sullivan, group chief economist for Bank of Ireland said.

The business mood remained sanguine on the whole but that’s not to say that everything in the garden is rosy. 

"This month’s research finds that uncertainty is hampering activity in sectors like hospitality and arts and entertainment for example, while firms in industry are grappling with supply bottlenecks and higher input costs, with adverse implications for export competitiveness.”

At 90.3 in October, the Business Pulse was up slightly on last month and 31.7 higher than a year ago. 

The Construction Pulse led the way this month, with the Industry and Retail Pulses also a little firmer. 

The Services Pulse slipped however, with many firms indicating that uncertainty about economic policy is holding them back.

The Housing Pulse survey also remained steady. Factors like excess savings and the extension of the help-to-buy scheme added to demand for homes. 

Four in five of those surveyed expect house prices to increase over the coming 12 months. 

On the supply side, the October survey finds that 74% now think it is a good time to sell a property.