| 10.7°C Dublin

Irish shoppers say worst is over as confidence rises

Irish consumers believe the worst of the crisis is over and expect spending to return to healthy levels.

Sentiment among consumers has stabilised to levels which are better than any time since the first three months of 2008.

The latest consumer confidence index, which is a strong indication of the state of the economy, remained comfortably above the 50.2 level recorded in December 2008.

Consumers ended last year in a positive but cautious mood, with the index standing at 53.3 in December.

It was the third month in a row in which consumer sentiment was steady and the data appears to confirm a clear, if modest, improvement in confidence in recent months.

Four out of five consumers expect unemployment will increase further in 2010, while three out of five think the economy will shrink further.

KBC economist Austin Hughes said that spending power remains under pressure but there are tentative signs that consumers believe the worst may be over for the economy. "While Irish consumers aren't unrealistically optimistic about what the economic future may hold, there are signs of an easing in the degree of pessimism about the year ahead," he said.

However, Mr Hughes pointed out that the survey was carried out ahead of the severe Budget, which explained why people were more pessimistic about their household finances in December compared with the previous month.

"That said, it should be noted that the deterioration in these elements of the survey was not particularly sharp," he said.

"Although they remain cautious, they are notably less nervous than they were 12 months ago.

"So, consumer sentiment is telling us that 2009 ended on a weak but notably less awful note."

Separately the economic outlook across Europe is in contrast to the Irish readings and recorded weaker sentiment.

In Britain, consumers fear they will be hit by tax rises while Germans are concerned about the jobs situation.

Economists will be reviewing Christmas sales data which is due to be released later this week.

Retailers suffered a massive blow over the past year as consumers held back on spending.

But it is expected that sales in December across Europe will have enjoyed a seasonal boost.