Consumer sentiment on mend even before restrictions ended

Survey shows a bounce back from the depths last month when the Government's 8pm closing restrictions for pubs and restaurants were first imposed

Economists are wondering how quickly Irish households will spend down an estimated €7bn in excess savings that have cumulatively been built up over the past two years of the pandemic.

Irish consumer sentiment was already on the mend even before last weekend's lifting of almost all of the Omicron restrictions, boding well for spending to drive the economic recovery this year and in 2023, a major survey survey reveals.

The reading of consumer confidence on the regular KBC Bank monthly survey showed a bounce back from the depths last month when the Government's 8pm closing restrictions for pubs and restaurants were first imposed. 

"At current levels, Irish consumer confidence is still marginally below the long-term, 26-year average of the series. So, it still speaks of a reasonably cautious Irish consumer but, importantly, one who is not insensitive to emerging positive developments," said its chief economist Austin Hughes. 

Boost for retailers

Mr Hughes said that suggests that the return to spending will not result in some sort of "celebratory spending splurge" but will help retailers nonetheless.           

Economists are wondering how quickly Irish households will spend down an estimated €7bn in excess savings that have cumulatively been built up over the past two years of the pandemic.

Airlines like Ryanair are betting that a good part of the savings will leak away into foreign travel and holidays, rather than being spent at home. 

Many analysts, including Mr Hughes, assess there will be no repeat of the spending excesses of the early 2000s, although most believe that some will go to further fuel house prices which have risen rapidly, by 14% in the past year.

That may help take the pressure from the potential of Irish inflation — which has so far been driven mostly by energy and rental costs from spilling over across the economy. 

Mr Hughes said that international surveys show Irish consumers was harder hit by the pandemic than elsewhere.