Consumer sentiment brightens slightly for Christmas – but many worry about the pressure on the cost of living for the year ahead

Before Christmas, consumer sentiment improved slightly.

But pressure on the cost of living, along with uncertainty, is seen as a key negative for 2023.

Housing construction and climate change are also concerns for the majority of consumers, according to the Credit Union Consumer Sentiment Index.

The index rose to 48.7 this month from 45.3 last month, although consumers remain concerned about their financial prospects.

This is the second improvement in the last three months, with only four increases in the last 12 months.

Economist Austin Hughes, who compiles the index, said the improvement tentatively suggests consumers now feel they have prepared as much as possible for very difficult economic and financial conditions.

He said the improved mood suggests Christmas may bring some relief to Irish consumers. He said this month’s reading compares to previous surveys.

However, it is at its highest level since August, when the threat of very expensive lighting and heating began to mount this winter.

The slight improvement in consumer sentiment is attributed to the release of relatively positive economic data showing low unemployment, slowing consumer and home price inflation and buoyant tax receipts, as well as strong economic growth.

Mr Hughes said fears of a huge slowdown in the labor market had eased after early announcements of job losses in the tech sector.

“As a result, the significant weakening of the employment component of November’s sentiment survey has been completely reversed,” Mr Hughes said.

However, pressure on the cost of living over the next year was cited as the top concern when consumers were asked what matters most to them at the moment.

Price pressure was cited by 69 percent of consumers as an issue that would be a problem in the next year. A broadly similar number views global economic uncertainty as significantly negative. According to the credit union’s sentiment index, housing construction and climate change follow closely behind.

Mr Hughes said the survey results showed that housing was a key issue.

“Likewise, the majority view that the issues of climate change are of immediate concern is also striking,” he said.

Around 20 percent of respondents view the multinational sector negatively, reflecting our over-reliance on foreign-owned firms for jobs and tax revenue, Mr Hughes said.

However, just under half of Irish consumers see continued multinational investment in Ireland as having a positive impact on the outlook for the year ahead.

The survey shows that consumers were slightly more negative about their personal finances this month, although their spending plans have picked up slightly.

Although official inflation has eased over the past month, consumers may have spent more money on more expensive items like heating and groceries in recent weeks. Consumer sentiment brightens slightly for Christmas – but many worry about the pressure on the cost of living for the year ahead

Fry Electronics Team

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