Irish consumers end 2024 on cautious note but more positive about their finances next year
Irish consumers end 2024 still dealing with the fallout from a cost-of-living crisis but their outlook is a little less negative about their finances.
The December Credit Union Consumer Sentiment Index published on Monday shows consumer sentiment largely holding steady. With household incomes increasing faster than inflation, the survey of 1,000 consumers found households were less fearful about the prospects for their own finances in the year ahead, and this has also prompted an increase in spending plans.
The overall index gave a reading of 73.9 for December, marginally down on the 74.1 reading that was posted both in November and October. The December reading is also well below the long-term survey average of 84.3, signalling sentiment is quite subdued at present.
However, the reading is a significant improvement on December 2023 and is slightly higher than the average figure for 2024, suggesting consumers' concerns have eased somewhat.
Economist Austin Hughes said a range of economic data released during the survey period, from growth figures to exchequer returns, suggested continuing solid gains in activity and employment, an even broader range of economic commentary emphasised large and looming downside risks to the Irish economy and the public finances.
"The key risk focus of late has been the potential for a damaging change in US policymaking that, through the possible introduction of tax changes and tariffs, could significantly threaten the health of the multinational sector in Ireland as well as weakening prospects across the broader Irish economy.
Mr Hughes said a notable improvement in the survey for household finances was likely linked to budget-day announcements of one-off payments and the delivery of the first tranche of these last month.
Central Statistics Office data show that, after adjusting for inflation, economy-wide household income was 2.4% higher in the third quarter of 2024 than a year earlier. However, when account is taken of the increased number of households in Ireland through this period, it seems the average Irish household saw a small drop in their ‘real’ income over the past year.
Households are also still facing increased food prices this Christmas. Data last week from Kantar shows the average cost of a Christmas dinner for a family of four has risen to nearly €35 this year.
The CSO said the price of a pound of butter had risen 58c in the past year, cheddar cheese went up 23c per kilo, and two litres of full-fat milk rose 13c, while a white sliced pan had fallen by 3c.
As grocery prices continue to increase, households have been turning more towards promotions, with sales on promotion reaching 22% in November, the highest level seen since February, Kantar said.
The survey also sought the views of consumers on the Irish economy in 10 years' time. It revealed a three-way split, with broadly similar numbers of consumers suggesting the Irish economy would be stronger (30%), the same as today, (29%), and weaker than today (34%).
Female respondents were notably more negative than males and the incidence of positive views also increased with income.
Views were more polarised among the under 35s, with a stronger incidence of both positive and negative views than across the survey as a whole. The most negative demographic was those aged 55 to 64, where views could reflect concerns about their capacity to provide for their retirement years as well as current financial commitments.