UCD’s Michael Smurfit Graduate Business School and the Marketing Institute’s latest consumer monitor for the first quarter of this year pointed to rising costs, high unemployment, and new taxes keeping confidence low.
It showed that a slight drop occurred in February and March of this year due to concern about the impact of the new property tax and cuts to household finances.
The study also showed household lending continuing to fall. Although house loans rose 8% between November and December of last year to avail of mortgage interest relief, total household lending fell 4% for the first quarter of this year.
The study found that while new car sales continue to struggle — down 12% for 2012 — secondhand car sales are up 9%.
As people continue to tighten their belts, the study found that spending in most retail categories like fuel, clothing, footwear and textiles, books and stationery, and bar sales continued to fall over the first quarter.
However, spending on essential products, such as food, has held up well. Food sales were up 0.4% in volume and 1.7% in value.
Credit card debt continues to decline to date this year reflecting reduced consumer spending. The average credit card debt stands at €1,275.
Commenting on the study, professor of marketing at UCD Smurfit School, Mary Lambkin, said spending was virtually flat for the first quarter of 2013 year on year, suggesting that the market may have bottomed out and be stabilising. “While these conditions are very challenging for many retailers, it is still a positive sign that retail sales may be stabilising after four years of decline, with growth prospects in some categories,” she said.
Chief executive of the Marketing Institute, Tom Trainor, said that given the scale of the recession in the past five years, people have become increasingly cautious about spending their discretionary cash.
“Not surprisingly, this has seriously damaged confidence and consumers have responded by taking a cautious approach, increasing their savings and reducing their debts,” he said.
“On the plus side, employment seems to be picking up slightly in the private sector and there is some evidence of increased activity in the property sector, both of which should boost activity in the consumer economy.”