Irish consumer sentiment declined again in July according to the latest report published jointly today by IIB bank and the ESRI.
The overall Consumer Sentiment Index was at 78.3 in July compared to 89.0 in June. The 3-month moving average decreased to 86.6 from the 91.0 recorded in June and compares with a value of 101.8 in July 2001.
The Consumer Sentiment Index comprises two sub-indices - current sentiment and future expectations.
The index show that consumers are much less optimistic about the economic situation and about prospects in the labour market over the next year.
Commenting on the figures, the ESRI’s Mr David Duffy said: "It would appear that concerns about the deterioration in the public finances and sharply weaker global equity markets have had an impact on sentiment."
Mr Duffy said the decline in confidence of Irish consumers mirrors sharp declines in consumer confidence in both the US and Britain.
In addition, Mr Austin Hughes, chief economist at IIB Bank noted: "The extent of the decline in Consumer Sentiment in July was unusually large – the second largest percentage fall and the third biggest monthly points drop in six and a half years."
Mr Hughes added that the declines in consumer confidence in Ireland differed from thaT in the US as Irish households aren’t suffering the same direct blow to their personal finances from the drop in Equity markets as their US counterparts.
"This suggests Irish consumers are more concerned about the knock on effect of stock market turmoil on the health of the global economy," he said.
According to Mr Hughes though household spending should not decline by anything like the scale of the drop seen in sentiment, even a modest pull-back in spending could dent the fragile upswing in the Irish economy.