Household confidence falls for fourth consecutive month following spate of high profile price hikes

Increases in health insurance premiums among recent series of price rises hitting consumers in recent weeks 

The Credit Union Consumer Sentiment Survey showed an index reading of 65.7 for May, down modestly from the April figure of 67.8. Photo: Sam Boal/Rollingnews.ie

Consumer sentiment waned for the fourth consecutive month in May as a lack of improvement in persistent cost of living pressures weighed down on consumers, according to a survey. 

The Credit Union Consumer Sentiment Index for May showed consumers were less optimistic about their household finances, with confidence still being hit hard by the cost of living.

A special question asking how Irish consumers could handle an unexpected expense of €1,000 saw almost one in five respondents state they "could not handle an emergency or would have to sell something" to pay for it. 

Just over half of Irish consumers said they would draw on savings or income, with around 25% saying they would borrow from a financial lender, family or friends. 

"The special question in the May Credit Union Consumer Sentiment Survey highlights the difficulty that many Irish consumers would face in the event of an unexpected expense or bill," said David Malone, chief executive of the Irish League of Credit Unions. 

The Credit Union Consumer Sentiment Survey showed an index reading of 65.7 for May, down modestly from the April figure of 67.8.

This is the fourth consecutive month in which consumer sentiment has fallen, with the slip being interpreted as a "disappointment at the lack of improvement" rather than dramatically poorer conditions. 

There have only been five previous occasions in the 28-year history of the sentiment series in which confidence has weakened for four successive months, the most recent being in the immediate aftermath of Russia's invasion of Ukraine.

High-profile price increases 

Recent slips in sentiment follow several price hikes in recent weeks including higher excise duty at fuel pumps and increased premiums on health insurance, with Irish Life, VHI and Laya all announcing significant premium rises in recent weeks.

In the past twelve months, the cost of health insurance has increased by almost 12% according to most recent data from the Central Statistics Office, with further hikes likely to come throughout 2024. 

"While the rate of inflation has eased, a range of recent high-profile increases in living costs appear to be prompting a renewed sense of ‘feel-bad’ among financially stretched and fragile Irish consumers," the survey warned.

Despite prolonged falls in sentiment, the survey noted that confidence remains relatively modest and less negative than through 2023.

"If an easing in nervousness over the turn of the year seemed to reflect relief that economic and financial conditions would not be as bad as feared, there now appears to be growing disappointment that things are not improving nearly as far or as fast as Irish consumers had hoped."

"While we think the most recent drop in sentiment is significant, we don’t think it suggests a substantial change in Irish economic and financial conditions in the way that similar periods of weakening sentiment reflected the risk of ‘regime-shift’ in the past."

Despite "encouraging" signs of economic growth and a sharp fall in inflation, which last month fell 2.6% according to the CSO, the survey added that most Irish consumers will need much stronger evidence of a broad-reaching improvement to alleviate waning sentiment.