Just one in 10 people expect Budget measures to offset surge in costs as consumer sentiment hits 14-year low

Sharp energy price hikes, higher food costs and a stronger-than-expected rise in mortgage rates have pushed consumer sentiment to a 14-year low.

According to KBC Bank’s September Consumer Sentiment Index, just one in ten consumers expect the budgetary measures will do much to balance their living expenses.

Cost pressures have significantly worsened the outlook for household finances.

Economist Austin Hughes estimates that the average impact on households from an inflation rate of about 8.5 percent this year is about €3,300.

The pessimistic outlook for households reflects the fact that the last few weeks have seen almost inexorable bad news when it comes to the bills that have to be paid to get a home.

Also Read :  Young people will miss out in a budget that favours high-earners, financial experts warn

Mr Hughes said the drop in Irish consumer confidence in September was unusually large but not entirely surprising.

“The significantly lower sentiment probably reflects the damaging impact of almost unrelenting bad news on the cost of living during the survey period,” he said.

There has been a new wave of double-digit increases in energy costs, with petrol and diesel prices remaining high and food prices rising week by week.

Chief among these was a series of announcements of large and impending increases in energy bills. This has been overshadowed by mounting pressures in other areas such as food prices and back-to-school costs, as well as the prospect of larger and longer-lasting hikes in mortgage rates.

Also Read :  Is Car Leasing Dead?

KBC Bank’s Irish Consumer Sentiment Index fell to 42.1 in September from 53.1 in August.

The September reading is slightly below the April 2020 Covid shutdown reading of 42.6.

Mr Hughes said it meant consumer confidence was now at a 14-year low.

“In fact, the current reading is almost indistinguishable from the October 2008 figure of 42.0 or the 26-year low of 39.6 in July 2008,” he said.

September sentiment readings do not suggest Irish economic conditions are now as bad as those seen during the global financial crisis. But the low reading signals a sea change for consumers, he said.

Mr Hughes said there was also a risk that energy could be both unavailable and unaffordable.

Also Read :  Cash Stuffing: 6 Tips for Running a Cash-Only Budget

A specific question in the survey was asked about plans to help consumers around the house.

Little can be expected from a “Covid-style” financial bailout. Only every tenth consumer expects compensatory measures for all households.

A larger number expect compensatory measures for low-income households to be implemented.

Meanwhile, a poll has found the public divided down the middle over whether the government should increase social benefits in the budget to keep up with inflation.

Taxback.com’s pre-budget poll found that just over half of the 1,500 respondents do not support significant increases in benefits in line with inflation in Budget 2023.

Source link