Credit and debit card spending for the month of July was up 12 per cent, or €773 million, compared with the same month last year as the easing of public-health restrictions led to a recovery in consumer spending, new data from the Central Bank shows.
The Central Bank’s high-frequency daily credit and debit data captures expenditure of euro-denominated credit and debit cards issued to Irish residents.
It shows total spending in the week to August 1st increased by 8 per cent, or €121 million, when compared with the previous week.
As restaurants reopened for indoor dining, spending in that sector increased by 10 per cent, or €9.3 million, compared with the previous week. In contrast, spending on groceries fell by 3.6 per cent, or €10.8 million.
Goodbody analyst Shaun McDonnell highlighted the easing of restrictions, better weather, staycationing and the return of indoor dining as having contributed to a “V-shaped rebound in consumer spending” in Ireland.
A V-shaped recovery is characterised by a quick and sustained recovery in measures of economic performance after a sharp economic decline.
“Daily card spending climbed to 16 per cent above its pre-pandemic level in the week ending August 1st as fully-vaccinated consumers took advantage of the opportunity to dine indoors,” said Mr McDonnell.
“This contributed to a total July card spend that was an 11 per cent and 5 per cent ahead on an annual and two-year basis, respectively. While the fantastic weather in early July undoubtedly played its part, the result is notable nonetheless.
“Any concerns that a surge in the Delta variant would dampen the consumer-led recovery as has been the case in the UK have not come to fruition here in Ireland.
“The continuation of the speedy vaccine rollout, combined with the wider reopening of the economy in the coming months, suggests the prompt recovery evident in the data thus far will maintain its momentum for some time.”
Mr McDonnell said spending patterns would initially be concentrated in those sectors that consumers had been deprived of throughout lockdowns before eventually reverting to normalised trends.
“This was largely the case in July, as staycations and the return of indoor dining contributed to continued surges in spending on accommodation, which grew 5 per cent on a two-year basis and restaurants, which grew 16 per cent on a two-year basis,” he said.
“Not only did the volume of spending in these sectors increase, but consumers spent a larger proportion of their income on accommodation and restaurants in July on average – 5.8 per cent and 7.8 per cent, respectively – compared to the months prior.
“For additional context, the proportion of consumer spending in the accommodation and restaurant sectors peaked at 2.4 per cent and 7.1 per cent during their Christmas splurge.”
