Irish consumer sentiment improved in June as worries around tariffs cooled and interest rates fell, but concerns over trade wars, escalating military conflicts and cost of living pressure kept the gains marginal.
The latest Credit Union barometer saw its first back-to-back improvement since July last year as the consumer sentiment index rose from 60.8 to 62.5 from May to June.
The report said the large gap since the most recent back-to-back gain emphasises “how uncertain and threatening the circumstances facing Irish consumers have been of late, notwithstanding the continued solid performance of the economy through this time.”
The level of consumer confidence, despite the slight increase in the past month, remains well below the reading in June 2024 of 70.5, and well below the long-term survey average of 84.
The survey, which was conducted in partnership with Core Research, was compiled before the “heightened geopolitical uncertainty related to the escalation in military conflict in the Middle East”, the report said. Within this context, the rise in Irish consumer sentiment in June was mirrored in gains in similar measures for the US and UK.
In Ireland, the consumers’ assessment of the current economic conditions brightened, and 12-month expectations were resurgent. Falling from a height of 90.1, consumers’ evaluations of their personal financial situations in 12 months’ time has recovered somewhat from a trough in the low 70s in April and May, in reaction to the announcement of US import tariffs.
People’s general economic outlook has brightened also, but consumers have not yet regained their pre-tariff confidence. The report indicated that Irish consumers have become used to the economic instability in the system.
“As uncertainty and a threatening geopolitical landscape are now almost permanent features of the Irish economic landscape, consumers have already adapted their behaviour to these developments in recent years,” the report said.
“So, the threat of a trade war or even the increased threat of military conflict are not altogether radical changes in the landscape.”
Irish consumers are generally in a slightly stronger position in holiday spending power than a year ago, but an increased number of consumers are planning to spend more on holidays this year – 26 per cent – than it stood last year (23 per cent).
At the same time, the level of consumers unable to afford a holiday was little changed at 22 per cent this year. The rate of people planning to spend less on holidays increased from 15 per cent to 17 per cent.
The barometer said the results “highlight wide variations in financial circumstances across Irish consumers” and indicated a three-tiered financial situation among consumers.
The chief executive of the Irish League of Credit Unions David Malone, said: “The improvement in consumer sentiment in June, while marginal, is encouraging in that it hints that Irish consumers are adapting to a very challenging environment.”
