Summer sales and falling oil prices boost confidence
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Tuesday August 26 2008
THE slide in consumer confidence has halted for the first time in seven months due to summer sales, falling oil prices and static interest rates.
However, the consumer sentiment index still remains close to its record low of last month due to concerns about rising unemployment and falling house prices.
The ESRI/IIB Bank telephone survey of 900 people for August showed the index rose slightly from 39.6 in July to 43.4 this month. ESRI senior economist Dr David Duffy said that it was far too early to describe it as a turnaround. He said consumers still remained cautious
"Yes, we are off our all-time low of last month, but it would have to be sustained to have any kind of effect," Dr Duffy said.
Consumer confidence reached its highest level in January 2000 (130), which was seen as the peak of the original Celtic Tiger.
By January last year, the consumer sentiment index had dropped to 90 and fell again to 55 in January this year.
Dr Duffy said that while the reading was up for this month, any recovery was still tentative.
"A lot of the improvement seems to have come about from people perceiving it may be a better time to buy major household items, so there may well be a summer sales effect in there," he said.
Slight
The slight improvement in consumer confidence has also been boosted by the fact that the price of a barrel of crude oil dropped from $147 to $113 between mid-July and mid-August, reversing most of the increases since last April.
Labour finance spokeswoman Joan Burton said it was time for the Government to ensure the energy regulator reviewed the 18.5pc electricity price-rise granted to the ESB.
"I think if the consumers see the Government was making a serious effort to ensure that prices were being kept as limited as possible, it would have an effect on boosting confidence." She said the Government was giving the impression that it was still on holidays.
"I think it's about time they showed they are back at their desks and that they are working on behalf of consumers to make a very difficult situation somewhat easier," she said.
A Government spokesman said energy prices were a matter for the regulator.
IIB senior economist Austin Hughes said the fall in oil prices, coupled with the decision of the European Central Bank to leave its 4.25pc interest rate unchanged this month, had made consumers less fearful about the economy at a whole.
"Although confidence is fragile, consumers are at least capable of taking comfort in a number of slightly encouraging developments," he said.
ENDS
- Michael Brennan Political Correspondent
