Consumer sentiment tumbled to levels last seen during the global finance crisis 14 years ago as concerns about the impact of sharply higher energy bills hammered the outlook for household finances, a survey showed today.
Confidence has fallen in seven of the last eight months in line with inflation climbing to a near 40-year high.
The most recent survey coincided with the announcement of increases of between 27% and 47% in energy bills, as well as a step-up in grocery prices and official interest rates.
The KBC Bank Ireland consumer sentiment index slid to 42.1 from 53.4 in August, falling beneath even the low of 42.6 hit during the worst of the Covid-19 crisis and not far off the 26-year series low of 39.6 in July 2008.
The index had stood at 81.9 in January.
One of the survey’s authors said that as was the case when Covid-19 first struck, the reading should not be interpreted as suggesting Irish economic conditions are now as bad as those seen over a decade ago when Ireland required a sovereign bailout.
“Instead it is signalling a sea-change in consumer thinking in relation to their economic and financial circumstances,” KCB Bank Ireland’s chief economist Austin Hughes said.
“The normal expectation of an improving environment built on gains in employment and incomes is now being replaced by worries around fast and furious increases across a range of living costs allied to the threat that energy might be unavailable as well as unaffordable,” he added.
Finance Minister Paschal Donohoe has said that the outlook for the coming months has weakened considerably and that his department will cut its economic growth forecasts for next year as part of preparations for next week’s budget.
While retail sales have fallen in recent months, tax returns have remained exceptionally strong, with unemployment near a 21-year low of 4.3%.