KBC Bank says that the state of Irish consumer confidence reflects what it calls a “recovery that over-promised and under-delivered, with limited gains in average incomes in stark contrast to glowing reports on the Irish economy”.

The bank's consumer sentiment index ticked down to 85.2 in February from 85.5 in January.

Chief economist Austin Hughes (pictured) said the largely unchanged consumer confidence reading seems to reflect a balance between important but opposing influences that emphasises the confusing nature of Irish economic circumstances at present. 

“Consumers remain concerned about problems, whether these relate to their current reality or looming risks. This translates into a consumer sentiment reading that sees the glass as more than half empty,” Hughes stated

“Consumer confidence has been trending lower for the past year and a half, while positive momentum in the jobs market has remained impressively strong.  We continue to take the view that an element of ‘growth envy’ is weighing on consumer sentiment at present, as glowing commentary on Irish economic conditions has not been seen to deliver correspondingly marked improvements in the circumstances of the average Irish consumer.

In Association with

“Details of the sentiment survey have consistently suggested that progress at the level of the individual household from the conditions experienced through the austerity years has fallen short of improvement heralded in much economic commentary.”

Disposable Income

Hughes added: “Official data suggest household disposable incomes in aggregate are now about 15% higher in nominal terms than the previous early 2008 peak. This figure slips to a notably more modest 5% increase when adjusted for the increase in population in the interim. 

“However, if we use CSO data that suggest the number of households has increased faster than the population through the past twelve years, it transpires that the disposable income of the average household is still 2% less than in early 2008.”

“Moreover, through the recovery period of the past years, the annual increase in income per household  has averaged just 2.4% in nominal terms compared to an average 10.8% increase in nominal GDP over the same period.  

“The limited pace of recovery in average incomes and the marked shortfall relative to GDP likely informs a view that the economic recovery has significantly under-delivered for many consumers. The more muted gains in the circumstances of the average household broadly corresponds to the trend in consumer sentiment.”

The index will be available here.