Irish consumers 'bracing themselves for a major hit to their spending power'

Petrol, diesel, and home heating oil prices rose rapidly in March, leaving Irish consumers 'bracing themselves for a major hit to their spending power'

If military action ends soon, and energy markets return to their February pricing, consumer sentiment may move back quickly.

The escalating conflict in the Middle East risks a "large and lasting" deterioration in Ireland's economic and financial circumstances with consumer confidence now at a three-year low, economists have warned.

Surging energy prices have seen the latest Credit Union Consumer Sentiment Index record a reading of 56.7 in March, sharply down on the 65.2 figure for February and the lowest since March 2023.

Economist Austin Hughes, who authored the analysis of the index, said March’s survey “paints a picture of a nervous Irish consumer whose thinking has become materially more negative” with households also having a “much poorer” outlook for their finances which will cause them to cut back their spending plans.

“With motor fuel and heating oil rising rapidly through the March 2026 survey period and global developments suggesting the prospect of substantial increases in electricity and gas prices, Irish consumers appear to be bracing themselves for a major hit to their spending power as 2026 progresses,” he said.

“The weakest element of the sentiment survey in March was buying plans, suggesting a notably more cautious and constrained approach to consumer spending in coming months,” Mr Hughes said.

The survey shows consumer expectations for their financial circumstances over the next 12 months are at their weakest point since March 2022 when Russia invaded Ukraine.

Soaring energy prices 

Brent crude oil prices, a global benchmark for the cost of oil, was trading at around $107 (€92.85) a barrel yesterday. Before the US and Israel attacked Iran, oil was trading at around $78 a barrel.

The Dutch TTF natural gas one month futures were trading at just under €53 per megawatt hour yesterday afternoon - up from €32 prior to the war.

While the increasing cost of oil has already been seen in prices at the pump, natural gas prices will take slightly longer to feed through the system before showing up in customers' electricity bills.

Mr Hughes said given uncertainty around the conflict in the Middle East, it is “impossible” to predict how much of a pullback in Irish household spending power might be seen over the rest of 2026.

"The environment facing consumers in Ireland and elsewhere is now notably more threatening in the sense that it is unstable rather than uncertain, with the immediate risk of a large and lasting deterioration in economic and financial circumstances."

He said if military action ends soon, and energy markets return to their February pricing, consumer sentiment may move back quickly.

“If instead, there are large and lasting disruptions to energy supplies and a corresponding premium in energy pricing, there may be more significant downside risk to Irish consumer sentiment and spending.” 

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The fallout from the war, which has caused the worst energy shock in history, has spread far beyond the Middle East.

With the ⁠Strait of Hormuz, ​a conduit for a fifth of the world's oil and liquefied natural gas, effectively closed, the impact is rippling through sectors from plastics and airlines ​to technology, retail and tourism.

Some governments are weighing support measures last used during the covid pandemic. 

Farmers are struggling to source diesel for their tractors and tens of millions more people will face acute hunger if the war continues into June, the World Food Programme estimates.