New figures show that consumer sentiment improved a little in November as people cheered the dramatic falls in energy costs and interest rates.
The KBC Ireland/ESRI consumer sentiment index rose to 44.9 in November 2008 from a reading of 42 the previous month. However, the corresponding figure for the index this time last year was 63.1.
The November reading marks the third increase in consumer sentiment in the past four months, a surprising outcome in view of the raft of bad economic news recently.
KBC Ireland's chief economist Austin Hughes says that most consumers are worried about their jobs, concerned about a worsening economic outlook and anxious about their own finances. But they are also aware of the dramatic decline in energy costs and interest rates.
'The possibility of falling consumer prices in 2009 means that household spending power will stretch further, reversing the painful impact of a surging cost of living in recent years,' he adds.
The survey shows that people are slightly more negative about the prospects of the Irish economy and the outlook for jobs in the year ahead. Four out of five consumers expect economic conditions here to worsen in 2009 while only one in nine sees an improvement. A huge 91% of respondents also expect unemployment to increase next year.
However, the survey also finds that consumers were a little less negative about their own personal financial situation in November. Mr Hughes says that while Christmas spending may be very cautious it will not be cancelled.
He says that the painful squeeze on monthly budgets that resulted from both continuously increasing mortgage rates and soaring oil prices has now come to an end and consumers are beginning to contemplate the possibility of sharply lower energy bills and monthly loan repayments in the year ahead.
'Current economic uncertainty in being reflected in a shift in consumer perceptions,' commented the ESRI's David Duffy.
'A substantial part of the improvement in sentiment is due to a move from a negative to a neutral outlook of respondents, suggesting a more uncertain and cautious outlook by consumers', he said.
