Irish consumer sentiment reached its best level in two and a half years in July, according to the Credit Union Consumer Sentiment Survey in partnership with Core Research.
According to a report from the Credit Union composed by Austin Hughes, July signalled the second consecutive monthly increase following four months of declines.
In June, the consumer sentiment index was 70.5, and in July it reached 74.9.
While there has been no dramatic change in consumer thinking, the increases suggest a positive trajectory as the index reached its highest level since January 2022 (81.9) just before Russia’s invasion of Ukraine.
Improvements show that fear and financial strains are beginning to ease, although the level remains well below the sentiment survey’s long-term series average of 84.4, suggesting that Irish consumers are still burdened by high costs.
International Sentiment
Elsewhere, consumer sentiment remains mixed based on a number of factors.
In the US, another slight slip in sentiment suggested ongoing inflation concerns and more general economic uncertainty ahead of the presidential election.
The survey was carried out before Joe Biden withdrew from the presidential race, and it found Donald Trump was more likely to win than Biden which US consumers felt would be better for the economy and personal finances.
In the Euro area, there was a clear improvement, likely due to easing cost-of-living pressures and a resilient job market in Europe.
The ‘feelgood factor’ of the Euros Soccer Championship may have also lifted the mood, particularly in the UK as England reached the final.
Consumer confidence in the UK increased fractionally in July, with the survey completed two days before the Euros 2024 final English consumers were still optimistic about a potential victory.
Broad Reasons For Improvement
In relation to Irish consumer thinking, all five elements of July reading of the Credit Union Consumer Sentiment Survey (in partnership with Core Research) posted month-on-month improvements compared to June.
There was a slightly higher gain regarding the general economic outlook than in relation to jobs.
Among other elements, the victory of the Labour Party in the UK general election in early July offered the prospect of greater stability in the British economy and improved relations with the European Union, both of which spell good news for Ireland.
In terms of personal finances, Kantar reported a slight uptick in grocery price (+2.6% year-on-year in July compared to +2.5% in June), but official data showed that both food and energy prices fell month-on-month in June.
As well as this, EU data suggested that petrol and heating costs continued to edge lower.
The Future
The more muted improvement in thinking on the twelve month outlook for households suggests that there are no wild expectations regarding the Budget.
The strongest month-on-month improvement has been in relation to consumer spending plans.
This reflects eased inflation, wage growth improvement, and the prospect of a declining trend in borrowing costs in the wake of ECB’s first rate cut in nearly five years.
Overall, the tone suggests that Irish consumers are less worried about the economic outlook and a little less strained in household prices.
While better weather and advancement in the Euros 2024 could have boosted sentiment further, the future hopefully spells nice weather and Olympic success for Ireland.
Speaking about the results, the chief executive of the Irish League of Credit Unions David Malone said, “The further increase in consumer confidence in July holds out the prospect of notably healthier economic conditions for Irish households over the balance of the year.
“As always, consumers can rely on their local credit union to help them plan and progress towards a brighter financial future.”
Read More: UK GfK Consumer Sentiment Rises To Highest Level Since 2021
