Latest Consumer Sentiment Index

“Consumers are starting 2012 with a brighter disposition with sentiment improving from the depressed figures seen at the end of 2011.”

“In particular, consumers are less gloomy about current conditions. They reported a greater belief that now is a good time to make large purchases, despite the January VAT increase. Historically this component has improved every January, reflecting, at least in part, the winter sales, followed by a more subdued figure in February. We expect this pattern to continue and as a result some moderation might be anticipated next month.”

 “The Index has been exceptionally volatile in recent months, which suggests that consumers face a great deal of uncertainty and that they are continuously adjusting their expectations.

“The improvement in the sentiment survey in January doesn’t alter the picture of an Irish consumer who is nervous and cash constrained but it does suggest the intense fears seen in the December reading have eased somewhat of late. The threat of an imminent Euro break-up has faded and Irish consumers may also be a little less frightened about the impact of Budget 2012 on their household spending power.”

“Encouragingly, all the main elements of the Consumer Sentiment survey improved in January even if the gains were relatively modest. The buying climate saw the usual bounce in response to price discounting in post-Christmas sales. This accounted for about a third of the improvement in the sentiment index as a whole but the sales effect was somewhat smaller than seen in past years. This suggests that an uncertain outlook and a continuing squeeze on household finances are keeping Irish consumer spending under downward pressure.”