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Surprise as consumer sentiment hits 18-month high

Upswing comes despite low expectations from budget and worries over Brexit

KBC economist Austin Hughes said a number of factors may be driving the monthly rise, including confirmation that the repayment of water charges would be largely completed before end-year. Photograph: Philip Toscano/PA Wire

Irish consumer sentiment rose to an 18-month high in September despite downbeat expectations about next Tuesday’s budget and the ongoing uncertainty around Brexit.

The latest KBC Bank Ireland/ESRI consumer sentiment index rose 2.9 points to 105.8, its highest level since February 2016.

However, KBC economist Austin Hughes played down the significance of the shift, noting there was no evidence of a widespread “feel-good factor”.

He said a number of factors may be driving the monthly rise, including confirmation that the repayment of water charges would be largely completed before end-year.

“In circumstances where cash flow is still constrained for many households, this development might be expected to prompt a more positive assessment of personal financial circumstances,” he said.

Limited scope

Mr Hughes said the strong sentiment was unlikely to have been fuelled by expectations of a “giveaway” budget as most media coverage has highlighted the limited scope for concessions.

Overall, he said Irish consumer sentiment has been fairly “choppy” in recent years, reflecting the uneven nature of the Irish economic upswing and the degree of uncertainty that surrounds developments such as Brexit.

However, he noted that this year had seen a gradual unwinding of the nervousness that followed the UK’s decision to leave the EU as a feared sharp, speedy and broadly based deterioration in Irish economic conditions failed to materialise.

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