Consumer sentiment at highest since early 2006

Irish consumer confidence is at its highest level since February 2006, according to a new study.

The KBC Ireland/ESRI Consumer Sentiment Index rose from 98.5 in May to 102.8 this month with the three-month moving average increasing from 98.3 to 1000. The index is at its highest since early 2006 when the main index reached 102.9.

The prospect of tax cuts and public spending increases in the upcoming Budget, together with talk of public sector pay increases, are thought to be behind the upswing in sentiment.

The main index and both the two leading sub-indices were at their highest levels since 2006 while gains were also recorded in the five individual components of the index.

"Consumers view the current purchasing environment less negatively this month and continue to maintain a positive view of employment opportunities in the coming year," said Ciara Morley, a research assistant at the ESRI.

The report said the modest monthly rise suggested that confidence was building gradually rather than any sea-change in thinking.

According to the latest index, 75 per cent of consumers don’t expect an increase in their household spending power in the next twelve months. The survey also suggests a broadly shared sense among consumers that the Irish economy is doing well and that the outlook for jobs has improved. However, pressure on personal finances is still seen as widespread.