Households continue to grapple with cost pressures as 'problems persist'

Higher excise duty at the fuel pumps and increased charges for broadband, mobile and tv services, were implemented in April

Weakening outlook on household incomes may be driven by higher prices implemented at the start of April.

Consumer sentiment waned again last month as price pressure did not ease as quickly as expected for Irish households grappling with the cost-of-living squeeze, according to a survey.

The Credit Union Consumer Sentiment Index for April showed consumers were less optimistic about their household finances for the year ahead than they were last year.

“While conditions are not quite as difficult as they were, many Irish households are still under significant financial pressure and worried about a still uncertain economic outlook,” said Irish League of Credit Unions chief executive David Malone .

Weakening outlook on household incomes may be driven by higher prices implemented at the start of April. These include higher excise duty at the fuel pumps and increased charges for broadband, mobile, and tv services following annual price adjustments, as bills were altered in April to take into account the annual rate of inflation as of January plus an additional 3%.

However, some consumers may be concerned about upcoming changes to mortgage contracts. A large number of banking customers will come off fix-rate mortgage arrangements this year and will enter into agreements that will require an increase in repayments due to interest rate hikes introduced by the European Central Bank (ECB)

The survey showed a sentiment index reading of 67.8 for April, down modestly from the March figure of 69.5. The April reading marks the third monthly decline in a row following four successive monthly increases between October and January.

The current reading is “significantly below” the long-term average of 84.6 for the consumer sentiment survey, “implying consumer confidence is quite subdued at present”.

Job losses

The survey suggested that recent reports on job losses may have dampened the mood among consumers. Closures in hospitality have resulted in around 2,000 job losses since the start of the year, while the wave of layoffs in tech continues, with TikTok among firms to announce job cuts. However, Ireland’s jobs market remains tight with record low unemployment levels.

The survey recorded a third drop in a row for consumer confidence but cooling inflation and a robust economy means “consumers are not nearly as nervous as they were either six or 12 months ago.”

Meanwhile, consumer spending is expected to be “cautious” but a pull-back is anticipated.

“Increases in population and numbers at work imply healthy growth in household outlays,” according to the survey.

The vast majority of consumers will not be spending more on holidays this year, as discretionary spending power is limited for most Irish households, it said.

Some 23% of Irish consumers say they cannot afford to go on holidays this year, modestly down from 27% in 2023.

“The limited scale of improvement and the still substantial number of consumers unable to afford a holiday chimes with the message from the sentiment survey as a whole that progress is quite modest and problems still persist,” the survey said.