CONSUMER SENTIMENT has hit its worst streak for more than two years, having fallen for the fourth successive month in October.
The KBC Ireland/ESRI Consumer Sentiment Index slipped last month to 48.1 from 52.4 in September, bringing the index to its lowest level for 17 months. The index stood at 67.9 in June.
The decline in October was the least significant monthly drop since July, the report said, suggesting consumers were somewhat prepared for a torrent of bad news on the banking and budget front during the period surveyed.
The index shows consumer expectations have fallen, from 37.9 in September to 28.8 in October, suggesting people are becoming more negative about the outlook for their household finances with the budget looming.
“Two-thirds of respondents in October expected that their household finances would worsen in the next 12 months, compared to just half of respondents in the September survey,” the report said.
The index measuring current conditions, which includes consumers’ perceptions of the buying climate, improved to 76.7 in October from 73.8 in September.
KBC economist Austin Hughes said an improvement in the buying climate was most surprising. “This might be due to aggressive price discounts by retailers or possibly some ‘last hurrah’ spending before facing up the looming pain of a very tough budget. This could suggest consumer spending might be more resilient than is currently feared.”
A decline in the numbers on the Live Register in September and a series of job announcements appears to have improved consumers’ assessment of the outlook for employment, the report said.
A separate survey by the UCD Smurfit Business School and the Marketing Institute of Ireland showed consumers are continuing to save rather than spend. It found that people were saving 12.3 per cent of disposable income.
Mary Lambkin, professor of marketing at the UCD business school, said confidence had stabilised until the end of August but that the failure of the Government to give assurances or information about what may come in the budget was driving savings up.
“If could give a strong statement it would make people less fearful about new taxes and show that their income is stable so they might go out and spend in the pre-Christmas period,” she said.
“If we are kept in a state of paralysis until the budget, it leaves only one or two weeks until Christmas, which means the retail trade loses out, leading to a loss of VAT and other benefits.”
