Ireland: Consumer sentiment remains stable in December
January 10, 2019
The KBC Bank Ireland/ESRI consumer sentiment index came in at 96.5 in December, matching November’s print. The index thus staying below the critical 100-point threshold that separates optimism from pessimism, remaining firmly in negative territory. December marked the fourth consecutive month that the index has been in pessimistic territory after the departure from the nearly one-year long “see-saw pattern” of stronger consumer confidence in one month followed by weaker confidence among consumers in the next month in September.
While the index was unchanged in December from the previous month, households were significantly more pessimistic about the general outlook on the Irish economy—with the sub-component diving deeper into negative territory—as worries over Brexit intensified. Consumers also held less favorable views on the unemployment situation. On the other hand, respondents were more optimistic about their personal financial situation in the next 12 months in December amid a sharp downturn in oil prices and substantial seasonal price discounting. December’s print suggests that consumers are struggling to balance the risks stemming from Brexit against modest gains in purchasing power.
Commenting on December’s reading, KBC Ireland noted:
“We would not interpret the unchanged sentiment reading as suggesting there is any significant measure of stability in Irish consumer confidence at present. Instead, our sense is that Irish consumers continue to have considerable difficulties in assessing both the likelihood and possible impact of potentially important changes in their circumstances in the year ahead.”
Author: Nihad Ahmed, Economist