Consumer sentiment inches up in January despite Brexit worries

Irish consumer sentiment inched higher in January as post-Christmas sales and positive jobs news offset the ongoing Brexit woes.

The latest KBC Bank Ireland/ESRI consumer sentiment index rose to 98.8 last month from 96.5 in December, the second monthly increase in the past three months.

Nonetheless the headline reading is still well below the 2018 average of 102.5, suggesting consumers remain cautious, particularly with the Brexit storm cloud on the horizon.

“As consumers continue to juggle the risk of the UK crashing out of the EU with the reality of modestly improving conditions of late, the likelihood is that sentiment and spending indicators will remain on a choppy path in early 2019,” KBC Ireland’s chief economist Austin Hughes said.

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“As bills for Christmas spending arrive and UK difficulties in delivering the EU withdrawal agreement increase, the likelihood is that Irish consumer confidence will weaken in February,” he said.

Mr Hughes noted that the weakest element of the survey in January, as in recent months, was consumers' assessment of the outlook for the Irish economy. "For the second month in a row, more consumers expected weaker rather than stronger conditions to prevail in the next 12 months," he said.

“In the absence of any dramatic new developments in the Irish economy, with the possible exception of positive news in the shape of an earlier than generally expected return to surplus in the public finances, our strong sense is that political chaos in the UK and associated concerns about a related Brexit fallout on the Irish economy drove this result,” he said.