Consumer spending in Ireland looks likely to reach record levels by the end of 2018, according to the latest Consumer Market Monitor published by the Marketing Institute of Ireland and UCD Michael Smurfit Graduate Business School.

The report predict full-year 2018 consumer spending of  €105 billion compared with the previous peak of €100bn in 2007.

The CMM notes a surge in demand for household goods through Q3, with sales of hardware, furnishings and electrical goods incvreasing by 14%, making it the highest growth sector of retailing in 2018.

The Home Renovation Incentive scheme, which is due to expire on 31 December 2018, is incentivising households to invest heavily in the fabric of their homes, with 2018 spend expected to be around €2.1bn.

Strong Economy

The Q3 consumer report also points out that the strong economy is further strengthening consumer spend. An increasing number of people employed, together with expected pay increases of 3% in 2018, has led to a substantial uplift in the amount of disposable income circulating in the economy.

In Association with

As a consequence, according to the report, consumer spending rose by 3.6% in the first half of 2018, with full-year spending forecast to be up by at least 3%, with further increases in 2019 and 2020.

Consumer spending has also been supported by improving household balance sheets, mainly driven by the increasing value of peoples’ homes. Household net worth per capita is now estimated at €150,800, up 70% from the low of 2012.

Some of the pickup in sales of household equipment has been driven by new homes, with purchasers having to equip them from scratch. From a low point of 8,300 in 2013, 20,000 new homes are expected to be connected in 2018 and a further 22,000 in 2019.

Sales transactions across the residential property market are also increasing year on year, and are expected to total 55,000 for this year, up from 50,000 in 2017.

Retail Sales

The Q3 CCM notes that retail sales have continued to grow in 2018 but at a slower rate, up by 3.9% in volume and 2% in value in the first half of the year.

Growth accelerated in the third quarter, up 4.3% in volume and 3.7% in value year-on-year, and this momentum is expected to continue through the rest of 2018. VAT receipts are moving in tandem, up 5% for the year to the end of September.

Supermarkets and other food stores also performed well, as did pharmacies and department stores, although clothing and footwear were a bit weaker, as were sales through bars.

MII chief executive Tom Trainor commented: “Despite the uncertainty around the impact of Brexit on our economy, Irish consumer confidence is significantly higher than our European neighbours and there has been no apparent dampening of consumer spending, as both retail sales and spending on services have remained strong. However, we cannot take this for granted in the period ahead, as Brexit plays out.”