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Consumer sentiment dips in February after January bounce

By February 26, 2024No Comments

Consumer sentiment fell again in February, undoing some of the gains it made a month earlier.

The Credit Union Consumer Sentiment Index dropped to 70.2 in the month, down from 74.2 in January.

The research’s author, Austin Hughes, said the dip in sentiment is not surprising as the gain in January was significant, but most consumers are facing continuing cost-of-living pressures as inflation is retreating rather than reversing.

He added that consumer sentiment has fallen between January and February in eight of the past ten years, as post-Christmas bills arrive and winter energy costs bite.

“Encouragingly, the fact that the drop in consumer sentiment unwound only about a third of January’s gains, suggests that Irish consumers sense some lessening in the difficulties they have faced of late,” Mr Hughes said.

“While ‘headwinds’ facing the Irish consumer may be easing, there is still little sense of emerging ‘tailwinds’ that would prompt a sustained positive surge in sentiment,” he added.

All of the constituent parts of the index lost ground in February.

The smallest drop in the five main elements of the survey came in relation to the general economic outlook, reflecting to some extent the more modest improvements seen in this element as global economic concerns continue.

But in comparison the survey saw a comparatively large pull-back in sentiment towards employment, amid numerous reports of potential future layoffs.

The parts of the survey that focused on household spending power weakened more, on average, than components focused on macroeconomic elements.

“The pullback was less pronounced in relation views on how personal finances had evolved over the past twelve months, perhaps reflecting the impact of double welfare payments, electricity subsidy payments and improved social welfare rates and tax credits seen in January,” Mr Hughes said.

While consumers were also more nervous in relation to the outlook for household finances.

The survey also included a special question about savings and credit card usage and found around one in three consumers save regularly, with a similar number unable to save at all.

The ability to have a ‘Rainy day’ emergency fund was the most common reason for saving at present, the research found, while funding a holiday was the second most common reason cited.

The research also found that consumers are more likely to save for a long-term nest egg than retirement.

While on credit cards, around two in three consumers said they pay credit card bills in full each month.

But one in six incur extra credit card costs through minimum or late payments, over limit spending or cash advances.

Article Source – Consumer sentiment dips in February after January bounce – RTE

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