Saturday 1 October 2016

Consumers expecting a limited rise in incomes

Published 30/04/2015 | 02:30

THERE has been a slight improvement in how householders view their personal financial situation.

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New figures show that consumer sentiment rose fractionally in April.

And there was a marginal rise in the view of consumers of their personal finances.

The KBC Bank/ESRI consumer sentiment index rose to 98.7 in April, up from 97.8 in March.

It was the third monthly rise in the past four months, although still below the high point the index hit in January.

The figures come as new Central Statistics Office figures show that the standardised unemployment rate was 10pc in April, unchanged from March.

KBC Bank's Austin Hughes said both elements of the sentiment survey that relate to trends in personal finances improved in April.

"Our sense is that this may be driven by the combination of negative consumer price inflation that is boosting purchasing power and significant housing price inflation that is encouraging a positive 'wealth effect' for many households," Mr Hughes said.

He said that the current readings don't suggest any great expectations of a broadly-based increase in consumers' incomes through 2015. This means the trend in the sentiment survey through the coming year could be increasingly influenced by consumers' perceptions as to how attractive or affordable various pre-election policy proposals may be.

The survey also saw more consumers indicate they expect their personal finances will improve in the next 12 months than the number that envisage a deterioration.

However, this balance still hints at a relatively limited upturn in consumer spending as does a decline in buying conditions in the April survey. Mr Hughes said.

"Our judgement is that relatively modest changes in these areas point towards some modest easing but not the complete removal of pressures on household purchasing power of late."

The survey results indicate that consumers are no longer hugely affected by upbeat reports on the economy, Mr Hughes said.

This is suggested by a marginal weakening in sentiment in relation to economic prospects in the April reading. This occurred despite positive assessments by the IMF, the Central Bank, IBEC and the Nevin Economic Research Institute during the survey period. This means good news on the broad economic front is taken as a given, Mr Hughes said.

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