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Consumer sentiment increases sharply in January

A significant drop in December took economists by surprise but confidence levels now appear to have stabilised.

Image: Cash register image via Shutterstock

CONSUMER SENTIMENT IN Ireland rose sharply last month reversing the large drop in December, according to KBC’s latest index.

The Consumer Sentiment Index rebounded to 64.2 in January from 49.8 in December with KBC indicating that consumers appear less fearful now about the damage budget measures might do.

The bank said there has been a significant amount of encouraging news flow in relation to the outlook for the Irish economy in the final days of 2012 and into the new year.

Heavy price discounting in Christmas sales also brought about the usual seasonal improvement in the buying climate.

While KBC Bank Ireland said the results were encouraging, it repeated the caution it expressed in relation to last month’s data. Chief Economist Austin Hughes said that negative responses still outweigh positives with consumers remaining “fairly apprehensive about their future”.

Positive views on the Irish economy increased from 18 per cent of responses in December to 31 per cent in January – the highest proportion since June 2010. However 42 per cent of consumers still felt the Irish economy would weaken in 2013.

Worries about employment remained high in the latest index with 42 per cent of people saying they have a negative outlook for the jobs market and only one in four consumers expect unemployment to fall in the coming year.

The January survey still found that 60 per cent of consumers felt their personal finances had worsened in the past year whereas only 6 per cent judged that they had improved.

Hughes said that the uncertainty on the part of the consumers suggests that the government’s success or failure in securing a good deal on banking debt in Europe has the potential to exert a decisive influence on sentiment.

Related: Consumer spending power to stabilise this year, improve in 2014>

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