Consumer sentiment falls sharply
Consumer sentiment decreased considerably in December, with many consumers still concerned by Budget measures, personal finances and the future of the economy.
The KBC Bank Ireland/ESRI consumer sentiment index dropped from 63.8 to 49.8 last month. This fourteen point fall is the largest monthly change since the index was established.
The index lies far below the 2012 average of 61.0, while the 3-month moving average declined from 61.6 in November to 58.1 in December.
The Consumer Expectations Index comprises of two sub-sections. The Index of Consumer Expectations measures consumers’ perceptions of their future financial situation. This index fell to an eleven month low, decreasing from 51.2 in November to 38.8 in December.
Meanwhile, the Index of Current Economic Conditions is based on how consumers feel about their current financial circumstance compared to twelve months previous. This index fell sharply from 82.4 in November to 66.1 last month, the lowest it has been since October 2008.
Retail Excellence Ireland chief executive David Fitzsimons said the latest consumer sentiment index shows that the scheduling of the budget in December has a detrimental effect on consumer confidence and retail sales.
"This drop follows a pattern from previous years of weakening consumer sentiment in December after each year's Budget is delivered. The kite flying around the budget does not help consumer sentiment and causes many consumers to postpone their spend."