Consumer sentiment weakened in April, but the drop was not unexpected due to the range of very poor economic news and after the somewhat surprising improvement in sentiment in the previous three months.
The KBC Bank Ireland/ESRI consumer sentiment index dropped to 57.9 in April from 59.5 in March. Any figure over 50 signals growth.
KBC noted that higher inflation, increased mortgage rates and weaker after-tax incomes are weighing on Irish consumers and spending remains very weak.
The latest index shows that nearly two thirds of consumers expect higher unemployment and over half of consumers express concern about the economic outlook over the next 12 months.
Irish consumer sentiment has, however, held up better when compared with falls in other European countries, possibly due to a long run of bad economic news centred around the state of the Irish banks.
The Government said on March 31 that the lenders will need an additional €24 billion in capital on top of the €46 billion in funds already poured in.
KBC's chief economist Austin Hughes says that Irish consumers may have adjusted the sentiment and their spending patterns sufficiently to cope with the continuing fallout from the economic crisis.
'Consumers that feel they have adjusted to a fairly tough 'new normal' might also draw significant encouragement from a well crafted Government jobs initiative that is seen to improve Irish employment prospects,' commented Mr Hughes.
