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Irish consumer sentiment drops sharply from 7-year high
June 9, 2014 / 11:01 AM / 4 years ago

Irish consumer sentiment drops sharply from 7-year high

DUBLIN, June 9 (Reuters) - Irish consumer sentiment fell sharply in May from a seven-year high the previous month, a survey showed on Monday, with the authors pointing to recent election debates on austerity as a possible trigger for the fall.

The KBC Bank Ireland/ESRI Consumer Sentiment Index fell to 79.4 in May from 87.2 in April, which was the highest level since Ireland’s economy collapsed after a property bubble burst in 2008.

The number of consumers who expect their personal finances to worsen in the next 12 months climbed to 46 percent from 33 percent a month earlier, the survey said.

All five components of the survey declined in May, the first time this has happened in 16 months.

Rising house prices and falling unemployment have helped boost confidence since Ireland emerged from its European Union-International Monetary Fund bailout late last year, prompting government ministers to hint at an end to the country’s austerity programme.

But debates during an election campaign last month about new water charges and whether the government can afford to start easing off on austerity may have punctured the elation, the survey’s authors said.

“The size of the drop in sentiment last month is difficult to explain. It may owe something to a tendency for data series to throw up extreme outliers from time to time ,” KBC Bank Ireland chief economist Austin Hughes said.

“We also think the election campaign and concerns about water charges and medical cards may have caused consumers to take a gloomier view.”

The authors said in recent months consumers had appeared to become more optimistic due to improving news about the economy rather than any marked improvement in their own circumstances, which could make the improved sentiment fragile.

Economists polled by Reuters last month forecast gross domestic product growth of 2.1 percent in 2014, up from a 0.3 percent contraction last year. (Reporting by Conor Humphries Editing by Jeremy Gaunt)

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