Consumers believe finances have worsened despite cooling inflation, survey suggests

“Increasing uncertainty about the global economic outlook, ongoing fallout from the cost-of-living crisis, further high-profile redundancy announcements and sharply-divided views as to what the upcoming budget could and should do mean that the average Irish consumer is now confronted with a confusing and concerning picture,” said economist Austin Hughes.

The survey also showed overall outlook has significantly risen above depressed levels recorded in 2022 and consumers said their household finances improved fractionally in the month of September.

Mr Hughes said this “likely owes something to some combination of an easing in energy costs of late, a further cut in European Central Bank [ECB] interest rates in September, and a continuing slowdown in inflation".

Consumers are also becoming increasingly concerned about the prospects of employment, which may have influenced the overall sentiment.

“The jobs element of the sentiment survey has underperformed other elements of late in spite of low unemployment, sustained growth in numbers at work, and anecdotal reports of labour shortages in many areas,” said Mr Hughes.

There were several redundancy announcement in recent weeks which may have soured outlook on job creation. These announcements included Intel announcing details of severance packages and the closure of an R&D facility in Limerick, Cardinal Health closing in Tullamore, and Wasdell, a pharma packaging company, closing in Dundalk.

Also, monthly payroll data from the Central Statistics Office (CSO) showed the number of employees falling slightly between June and July, with 10 out of 15 sectors across the Irish economy recording lower payroll count. However, this comes after a period of record growth.

The overall reading of the index was 71.9 for September, which is effectively unchanged from the August figure of 72.

The September reading suggests that the momentum of progress evident in significant improvements in both the June and July surveys has now faded.

The Credit Union Irish Consumer Sentiment Survey is a monthly survey of a nationally representative sample of 1,000 adults.

The survey suggested that many consumers want the Government to prioritise long-term measures, especially housing and health plans, in Budget 2025 instead of one-off giveaways despite the overall tempered mood around personal finances. However, cost-of-living pressures were also seen as a key priority.

Perhaps reflecting the cumulative strain of several years of elevated living costs, slightly more consumers cite this as a priority for Budget ‘25 than for Budget ’24.

"In contrast, and likely reflecting the recent pull-back in energy costs, the share of consumers focussed on specific energy-related supports has eased to 32% from 40% a year ago," said Mr Hughes.