Consumer sentiment rose again in February
Published 08/03/2011 | 13:34
Consumer desire to spend increased last month despite the impact of new taxes and budget cuts, as well as the focus on the economy in the election campaign.
But experts warned that shoppers and households face even more significant tests over the coming months with higher mortgage interest rates on the cards.
Last month's consumer sentiment survey found people remain gloomy but that they have already taken into account looming bad news.
Analysts suggested the adjustments of households to difficult circumstances may not be quite as traumatic as feared.
Austin Hughes, economist with KBC Ireland which compiled the report with the Economic and Social Research Institute (ESRI), said the slight and surprising rise in sentiment figures hinted that consumers have prepared themselves for a lot of bad news.
"It is clear that Irish consumers are fairly gloomy at present and, of course, they face further problems," he said.
"In particular, looming ECB (European Central Bank) interest rate increases could take a further toll on confidence in the months ahead.
"That said, February survey results hint at some resilience in sentiment which might suggest spending may not be quite as weak as feared."
In February, the KBC/ESRI Consumer Sentiment Index rose for the third month out of four to 50.3.
The report said consumers were noticing an easing in the unemployment crisis and patchy signs of firms hiring.
ESRI economist David Duffy said: "The underlying message from the analysis is that consumers remain cautious in the present circumstances."
The data was obtained from telephone interviews in the first two weeks of February with around 800 completed questionnaires.