Consumer sentiment found to be cautious

Consumers remained cautious in October as higher borrowing costs and greater uncertainty about job prospects offset the positive impact of lower oil prices, writes Caroline Madden

The IIB/ESRI consumer sentiment index inched up fractionally last month from 86.5 to 86.7, but the three-month moving average fell for the eighth consecutive month.

Despite easing oil prices, consumers feel that their spending power is being squeezed by higher interest rates and increased cost of living pressures, according to Austin Hughes, chief economist at IIB.

Despite a significant reduction in numbers on the Live Register, consumers have become increasingly worried about their employment prospects. This follows high-profile job losses at Castlemahon and Unilever.

"The October sentiment results are disappointing in that falling oil prices should have boosted confidence," Mr Hughes said.

"A spate of lay-offs, doom-laden forecasts about the outlook for the Irish property market and concerns about migrations from Romania and Bulgaria may have increased job insecurity."

Mr Hughes said that the continued weakness of consumer sentiment may warrant a boost to "household spending power" in next month's budget.

However, he warned that any gains delivered in the budget will be weighed up by consumers against the "prospect of higher interest rates".