Irish consumer sentiment fell sharply for the second month in a row in April as concerns about living costs intensified and worries around the outlook for economic growth gathered momentum.

The KBC Bank Ireland consumer sentiment index fell from 67.0 in March to 57.7 in April. The long term for the index is  86.6.

The weakest elements of the April survey were those focussed on household finances and spending, suggesting increasing strains in making ends meet, according to KBC.

KBC Bank chief economist Austin Hughes said the declines in the confidence index in recent months represent unusually large moves for the survey and signal a marked change in the thinking of Irish consumers.

“The cumulative 24 point decline in the survey over the three months from February to April is the second largest in the 26-year history of the survey, exceeded only by the collapse in sentiment as Covid 19 closed down the economy in the spring of 2020,” Hughes added.

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As in March, consumers became increasingly worried about the broad ‘macro’ outlook. Seven out of ten consumers expect the Irish economy to be weaker in twelve months’ time while nearly half expect unemployment to be higher.

Unlike March, the weakening in expectations for the jobs market was slightly larger than for general economic prospects.

“We think that this may be related to a marked worsening in consumers’ assessment of their own spending power and the implications that may have for jobs,” said Hughes.

The most pronounced weakening in the April sentiment survey was in those elements focussed of consumers’ own spending power and spending plans. 

The KBC survey indicates that the  purchasing climate is the weakest since the Covid-closedown related results for April and May 2020.

According to Hughes: “Significantly, this may hint at a marked pull-back in consumer spending that is both forced and fear-driven. This might suggest little further positive momentum in Irish consumer spending through most of 2022.

“In circumstances where household spending power is expected to fall in inflation-adjusted terms, this is not entirely surprising, but it suggests the broader Irish economic temperature through the summer and beyond may feel a good deal cooler than might be inferred from most forecasts.”

The KBC Consumer Sentiment Survey is a monthly survey of a nationally representative sample of 1,000 adults undertaken by Core Research.