Irish consumer sentiment steady but subdued in November
Posted on: 27 Nov 2024
- Small contrasting moves in survey elements suggest Irish consumers are watching, waiting ….and still worrying
- Modest weakening in economic outlook likely linked to worries on trade and tax revenues following US election outcome
- Uptick in spending plans may be focussed on Christmas and ‘Black Friday’ beforehand but hints at stronger consumer spend
- Little change in consumer thinking on household finances
- We look at US consumer sentiment and the election outcome
- We compare ‘feelbad’ factor in US and Ireland, by looking at price changes in one consumer staple-it’s the eggonomy, stupid!!
- Special questions focus on Irish consumers planned Christmas spend;
- Slightly fewer planning spending cutbacks this Christmas (46% v 55% in ’23) but caution still prevails
- Only one-in-ten consumers plans to spend more on Christmas ’24 than a year ago
- Roughly half of Irish consumers will finance their Christmas spend from their income while one in three will use savings
- One in ten don’t know how they will pay for Christmas while 6% will rely on support from family and friends
- We estimate ‘Christmas cost inflation’ will be markedly lower in 2024 than in recent years.
Speaking on the release of the November sentiment survey data and analysis, David Malone, CEO of the Irish League of Credit Unions noted; ‘'It is encouraging that the November sentiment survey suggests consumer spending plans are improving and while, most Irish households will again be careful in their Christmas outlays, cutbacks are not quite as prevalent as in recent years. For assistance with their financial needs, big and small, at Christmas and throughout the year, Irish consumers can rely on their local credit union.'
Summary
Irish consumer sentiment held steady in November as conflicting forces weighed on the mood of Irish consumers. The adverse impact of an uncertain and increasingly unstable geopolitical backdrop was countered by the imperative of increased seasonal spending and stable if subdued readings on household finances.
While notably less anxious than the tone of consumer sentiment a year ago, the November survey suggests that continuing risks and cost strains mean that Irish consumers remain in a ‘watch, wait and worry’ mode.
In circumstances where concerns about the possible impact of policy changes in the US on the Irish economy attracted considerable attention, an unchanged Irish consumer sentiment reading in November should probably not be seen in a negative light.
We look at developments in US consumer sentiment in some detail and find that, while both sentiment and personal incomes on average are higher now than when the cost-of-living crisis began, views of household finances have developed have weakened markedly in recent years and sentiment has also moved in opposite directions for those US households with incomes over $100k and those under $100k.
We look at price trends in one consumer staple, the cost of a dozen eggs, in the US, Ireland, the UK and the Euro area to illustrate how sharply higher prices of ‘essentials’ may be weighing on consumer sentiment.
Section I; November sentiment survey sees Irish consumers postponing judgement on what may lie ahead but willing to spend a little more on Christmas
The Credit Union Consumer Sentiment Survey (in partnership with Core Research) shows an index reading of 74.1 for November, identical to that in October, although, as the table below illustrates, this outturn reflected small and offsetting changes in the main elements of the survey.
While it is not unusual for sentiment to show little change from month to month, as this signals no major mood swing on the part of Irish consumer, only once previously in the near twenty-nine-year history of the sentiment survey has the index been completely unchanged between one month and the next.
We think the unfolding US election result, the upcoming general election in Ireland and an increasing uncertainty about what the future may hold could have prompted Irish consumers to hit a pause button in terms of their assessment of their economic and financial circumstances in November, leaving sentiment steady but subdued.
Is sentiment understating consumers circumstances? It’s the eggonomy, stupid!
The preliminary reading for US consumer sentiment in November, which was taken before the election results were known, saw a small increase compared to October largely reflecting improving expectations that translated into the strongest reading in six months.
The Authors of the US study attribute the improvement in November to a much stronger responses from self-reported Republican voters than in recent months that more than offset notably weaker responses from self-reported Democrat voters.
In light of significant discussion on the role of consumer thinking on the economy in determining the outcome of the US election, we thought it might be instructive to examine how consumer sentiment in the US has evolved in recent years.
Although economic growth measures show encouraging trends, the consumer mood (and financial means) has been buffeted by the pandemic and its aftermath. Consumer sentiment has been heavily affected by cost-of-living concerns on both sides of the Atlantic for most of the past three years. (Although economists may compare data based on election and inauguration dates, consumers are less likely to focus on precise timeframes and more on a general sense of how good or bad things are and generally how long or short this has been the case.)
Over the past three years, US consumer sentiment has edged marginally higher (from 67.4 in November 2021 to 71.8 in November 2024) on greater optimism about the future while Irish consumer sentiment has softened marginally (from 83 to 74.1).
In terms of ‘headline’ confidence movements in recent years, the US metric appears to reflect both the solid ‘macro’ performance of the US economy and the specific impact of large fiscal supports while it might be argued the Irish measure has been more heavily influenced by a larger increase in energy costs and a greater ongoing element of uncertainty about the economic outlook.
However, when the details of the two surveys are examined a little more thoroughly, a notably greater degree of ‘feel-bad’ factor becomes evident in US consumers assessment of their current circumstances.
A detailed breakdown of the US sentiment figures is only available up to October. These show that while US consumers are more optimistic about the future than they were three years ago, they are altogether more downbeat about their current circumstances, particularly their household finances. The index measuring consumer thinking as to how their household finances compared now to a year ago stood at 81 in October 2024 compared to 115 in September 2021.
Perhaps more tellingly, the detailed responses show that overall sentiment among American families earning less than $100k per annum was clearly lower in October 2024 at 62.6 than the October 2021 reading of 70.9 while among families earning above $100k it had increased from 73 to 81.8.
Personal income figures for the US show that between the second quarter of 2021, when cost of living pressures started to build, and the second quarter of 2024, economy-wide incomes still increased -in 'real' or inflation-adjusted terms by 3.2%, an encouraging result albeit slightly slower than the 4.4% gain recorded for economy-wide household incomes in Ireland.
However, these are aggregate figures and to see what has happened to the ‘average’ household, you have to adjust for increases in population and households. For the US, this translates into average household income growth of around 1.5%. In Ireland population growth and the number of households have grown even faster. So, the average Irish household has seen a drop in its disposable income, in real terms, of about 5 per cent between the Spring of 2021 and 2024.
These disparities between the aggregate and the average go some way to explaining notable differences in the tone of many mainstream economic commentaries and consumers experiences.
Drawing on these various data, it would seem that the broad sense of a strongly held view that many Americans feel they are markedly worse off now than three years ago seems to significantly reflect the experience, particularly among lower-income households of very sharp increases in the cost of frequently bought and consequently high-profile essentials.
Although consumers have had some experience of volatility in energy prices, food price inflation was relatively stable and low through the past decade. More recently, there has been a dramatic regime change entailing a persistent and sharp pick-up in food prices.
In the US, food price inflation averaged +1.7% between 2010 and 2019, in the past three years it averaged +6.2%. The comparable figures for Ireland are -1.3% and +6.4% respectively, which suggests an even starker regime shift and a correspondingly larger shock to household budgeting..
The graph below puts some colour on the intensity of the price shock suffered by consumers in recent years and the dramatic departure it marked from the earlier experience of price stability by focussing on a single staple food item that saw a radical change in pricing in recent years. It sets out the cost of a dozen eggs in the US and Ireland in recent years. For the US, the surge in costs driven by higher feed costs was sharply amplified by bird flu.
As a result, after a decade of virtually unchanged prices, the average cost of a dozen eggs in the US rose from $1.82 in October 2021 to $4.82 in January 2023. Although prices have fallen back somewhat, the October 2024 cost of $3.32 still represents a cumulative increase of 82% over the past three years.
Over the same three-year period, Central Statistics Office data indicate that the average price of a dozen eggs increased in Ireland by 25.8% (from €3.56 to €4.48). Incidentally, Eurostat data show that the average increase in egg prices across the Euro area over the past three years was 28.9% while, in the UK, egg prices increased by 45.6%.
Increases of this scale may be eggseptional (!), but in circumstances where most prices are rising materially, they tend to exert an outsized impact on consumer thinking as to how severe the cost-of-living pressures they face may be.
Although economists may rightly pay more attention to broader based and statistically robust measures of inflation, for the average consumer, and particularly for lower income and cash constrained households, the change in the price of staples such as eggs probably does more to capture the nature and degree of the cost pressures they currently face. To mangle the phrase coined by Bill Clinton’s strategist in the 1992 election campaign, it would still seem that it’s the economy, stupid.
For completeness in relation to sentiment developments in November, we should mention that Consumer sentiment saw a clear weakening in the Euro area sentiment that likely reflected concerns about possible policy shifts on the other side of the Atlantic as well as a pick-up in Euro area inflation and firmer fuel prices, while the collapse of the German Government may also have increased uncertainty closer to home.
Meanwhile in the UK, consumer sentiment rose unexpectedly, driven, in particular, by a step-up in purchase plans that is being attributed to ‘Black-Friday’ bargain-hunting. It also appears that British consumers’ immediate reaction to the UK Budget was less negative than envisaged while a further Bank of England rate cut in early November, accompanied by policy guidance that a ‘gradual approach to removing policy restraint remains appropriate.’ may have sustained expectations for a continued easing in borrowing costs in the UK.
November sees no major changes in Irish consumer thinking on economic and financial conditions
In keeping with the unchanged sentiment reading overall, there were only marginal and offsetting changes in the main elements of The Credit Union Consumer Sentiment Survey (in partnership with Core Research) between October and November.
A small weakening in views on the twelve-month outlook for the Irish economy might be considered a positive outcome in light of the extensive focus through the survey period of the downside risks to growth in general and the multinational sector in particular by the pronouncements on trade and tax rhetoric made by the incoming US president, Donald Trump.
Partly offsetting a weaker general economic outlook was a slightly better jobs outlook that likely owes something to a range of new job announcements and fewer reports of layoffs as well as the underlying strength of the jobs market signalled in labour force data for the third quarter.
Consumer thinking on household finances, both past and future changed little between October and November.
Negative sentiment continues to dominate in spite of the easing in inflation of late. Indeed, an increase in motor fuel prices in November coupled with some recent pick-up in food prices in the latest official data and high profile increases in insurance costs likely tempered any sense that cost pressures may be easing meaningfully.
The most positive element of the November sentiment survey was in relation to consumers buying plans. In part, this reflects seasonal spending demands as Christmas approaches. It also likely owes something to a significant ratcheting-up of ‘Black Friday’ advertising promising substantial price discounts. Cost-conscious consumers are probably also aware of a significant easing in Christmas cost inflation as our analysis in section II illustrates. Finally, Government announcements as to exactly when ‘bonus’ welfare payments would be paid could have triggered related spending plans.
It remains the case that more consumers think now is a bad time rather than a good time to make major purchases, and the November reading is only marginally ahead of recent months. However, the latest improvement means this element of the survey is now at its strongest since early 2022. As a result, it may be signalling some likely modest improvement in Irish consumer spending before year-end.
Section II: Sentiment survey suggests 2024 will see less of a ‘cutback Christmas’
As usual, the Credit Union Consumer Sentiment Survey (in partnership with Core Research) included a couple of supplementary questions on topics of current interest. As we have done regularly at this time in recent years, this month’s special questions focussed on planned Christmas spend.
As the graph above shows, fewer Irish consumers are planning to cut back on their Christmas spend in 2024 than in either of the past two years.
The clear sense that cost-of-living pressures are easing slightly rather than entirely over is indicated by the fact that the number of consumers planning to cut back compared to last year is still more than four times as many as the number planning to spend more.
Consumers outside Dublin, females and those aged between 45 and 54 were groups who were more likely to say they plan to cut back on spending than others. Not surprisingly, planned cutbacks reduced as the income profile of consumers rose and those reporting difficulty making ends meet were three times as likely to say they plan Christmas spending cutbacks as those who do not face such difficulties.
Consumers based in Dublin, those on higher incomes and those aged under 25 were more likely to be among the comparatively small number planning to increase Christmas spend this year. Males were three times more likely to plan higher Christmas spending this year than females.
Christmas cost inflation may be easing
One reason why consumers may feel that there may be less need for cutbacks this Christmas is that the cost of Christmas-related spending, as well as other demands on the household purse, may not be increasing nearly as fast as in recent years.
While spending priorities vary widely from household to household and the relative importance of various items in the shopping basket changes accordingly, we repeated a purely illustrative exercise mapping out what various Christmas-focussed items might cost using October consumer price data from the Central Statistics Office. (Note this exercise is based on official price data and our own very rough assumptions about the relative importance of key elements in Christmas outlays rather than the consumer sentiment survey itself. It should also be pointed out that Christmas spend notably omits any outlay on energy costs).
As the table below suggests, falling clothing and toy prices together with much slower increase in food and restaurant costs mean ‘Christmas inflation’ in Ireland in 2024 seems set to be much lower than in 2022 or 2023.
If cost pressures are less intense now than a year ago, it may be instructive to ask how Irish consumers plan to finance their Christmas spending. As in previous years, we asked consumers how they would pay for additional seasonal spending. The responses are shown in the diagram below.
As the diagram indicates, Irish consumers expect to fund their Christmas spend in a very similar manner in 2024 to previous years.
Roughly half of consumers will fund Christmas through their income while about a third will draw on savings. Nearly one in ten are unclear as to how their Christmas spend will be financed. While the numbers involved are small, there is also an increase in the proportion of consumers relying on financial support from family and friends for Christmas.
Not surprisingly, the proportion of consumers funding their Christmas spend from income is far lower among those facing difficulty making ends meet and, equally unsurprisingly, this response increases in frequency alongside the respondent’s income. Those aged under 24 are more likely to say they will rely on support from family and friends while those facing difficulty making ends meet are more than twice as likely to rely on this source of funds as other groups.
Those who say they are having difficulty making ends meet are four times more likely to say they do not know how they will fund Christmas spend this year. Perhaps surprisingly, the age group most likely to say they do not know how they will pay for their Christmas outlays are those aged between 45 and 54.
The broad picture painted by the special questions this month is one where most Irish households plan a Christmas that is cautious rather than carefree or cancelled at either extreme.
That said, the survey also suggests that significant numbers of Irish consumers either plan to cut back, are relying on family and friends or don’t how they will pay for Christmas. While economic conditions at the ‘macro’ level have clearly improved, it seems that Christmas 2024 will be a time of wonder for some Irish consumers and worry for others.
The Credit Union Irish Consumer Sentiment Survey is a monthly survey of a nationally representative sample of 1,000 adults. Since May 2019, Core Research have undertaken the survey administration and data collection for the Survey. This tranche of the survey was live between November 6th and 16th 2024.
Speaking on the release of the November sentiment survey data and analysis, David Malone, CEO of the Irish League of Credit Unions noted; ‘'It is encouraging that the November sentiment survey suggests consumer spending plans are improving and while, most Irish households will again be careful in their Christmas outlays, cutbacks are not quite as prevalent as in recent years. For assistance with their financial needs, big and small, at Christmas and throughout the year, Irish consumers can rely on their local credit union.'
Summary
Irish consumer sentiment held steady in November as conflicting forces weighed on the mood of Irish consumers. The adverse impact of an uncertain and increasingly unstable geopolitical backdrop was countered by the imperative of increased seasonal spending and stable if subdued readings on household finances.
While notably less anxious than the tone of consumer sentiment a year ago, the November survey suggests that continuing risks and cost strains mean that Irish consumers remain in a ‘watch, wait and worry’ mode.
In circumstances where concerns about the possible impact of policy changes in the US on the Irish economy attracted considerable attention, an unchanged Irish consumer sentiment reading in November should probably not be seen in a negative light.
We look at developments in US consumer sentiment in some detail and find that, while both sentiment and personal incomes on average are higher now than when the cost-of-living crisis began, views of household finances have developed have weakened markedly in recent years and sentiment has also moved in opposite directions for those US households with incomes over $100k and those under $100k.
We look at price trends in one consumer staple, the cost of a dozen eggs, in the US, Ireland, the UK and the Euro area to illustrate how sharply higher prices of ‘essentials’ may be weighing on consumer sentiment.
Section I; November sentiment survey sees Irish consumers postponing judgement on what may lie ahead but willing to spend a little more on Christmas
The Credit Union Consumer Sentiment Survey (in partnership with Core Research) shows an index reading of 74.1 for November, identical to that in October, although, as the table below illustrates, this outturn reflected small and offsetting changes in the main elements of the survey.
While it is not unusual for sentiment to show little change from month to month, as this signals no major mood swing on the part of Irish consumer, only once previously in the near twenty-nine-year history of the sentiment survey has the index been completely unchanged between one month and the next.
We think the unfolding US election result, the upcoming general election in Ireland and an increasing uncertainty about what the future may hold could have prompted Irish consumers to hit a pause button in terms of their assessment of their economic and financial circumstances in November, leaving sentiment steady but subdued.
Is sentiment understating consumers circumstances? It’s the eggonomy, stupid!
The preliminary reading for US consumer sentiment in November, which was taken before the election results were known, saw a small increase compared to October largely reflecting improving expectations that translated into the strongest reading in six months.
The Authors of the US study attribute the improvement in November to a much stronger responses from self-reported Republican voters than in recent months that more than offset notably weaker responses from self-reported Democrat voters.
In light of significant discussion on the role of consumer thinking on the economy in determining the outcome of the US election, we thought it might be instructive to examine how consumer sentiment in the US has evolved
in recent years.
Although economic growth measures show encouraging trends, the consumer mood (and financial means) has been buffeted by the pandemic and its aftermath. Consumer sentiment has been heavily affected by cost-of-living concerns on both sides of the Atlantic for most of the past three years. (Although economists may compare data based on election and inauguration dates, consumers are less likely to focus on precise timeframes and more on a general sense of how good or bad things are and generally how long or short this has been the case.)
Over the past three years, US consumer sentiment has edged marginally higher (from 67.4 in November 2021 to 71.8 in November 2024) on greater optimism about the future while Irish consumer sentiment has softened marginally (from 83 to 74.1).
In terms of ‘headline’ confidence movements in recent years, the US metric appears to reflect both the solid ‘macro’ performance of the US economy and the specific impact of large fiscal supports while it might be argued the Irish measure has been more heavily influenced by a larger increase in energy costs and a greater ongoing element of uncertainty about the economic outlook.
However, when the details of the two surveys are examined a little more thoroughly, a notably greater degree of ‘feel-bad’ factor becomes evident in US consumers assessment of their current circumstances.
A detailed breakdown of the US sentiment figures is only available up to October. These show that while US consumers are more optimistic about the future than they were three years ago, they are altogether more downbeat about their current circumstances, particularly their household finances. The index measuring consumer thinking as to how their household finances compared now to a year ago stood at 81 in October 2024 compared to 115 in September 2021.
Perhaps more tellingly, the detailed responses show that overall sentiment among American families earning less than $100k per annum was clearly lower in October 2024 at 62.6 than the October 2021 reading of 70.9 while among families earning above $100k it had increased from 73 to 81.8.
Personal income figures for the US show that between the second quarter of 2021, when cost of living pressures started to build, and the second quarter of 2024, economy-wide incomes still increased -in 'real' or inflation-adjusted terms by 3.2%, an encouraging result albeit slightly slower than the 4.4% gain recorded for economy-wide household incomes in Ireland.
However, these are aggregate figures and to see what has happened to the ‘average’ household, you have to adjust for increases in population and households. For the US, this translates into average household income growth of around 1.5%. In Ireland population growth and the number of households have grown even faster. So, the average Irish household has seen a drop in its disposable income, in real terms, of about 5 per cent between the Spring of 2021 and 2024.
These disparities between the aggregate and the average go some way to explaining notable differences in the tone of many mainstream economic commentaries and consumers experiences.
Drawing on these various data, it would seem that the broad sense of a strongly held view that many Americans feel they are markedly worse off now than three years ago seems to significantly reflect the experience, particularly among lower-income households of very sharp increases in the cost of frequently bought and consequently high-profile essentials.
Although consumers have had some experience of volatility in energy prices, food price inflation was relatively stable and low through the past decade. More recently, there has been a dramatic regime change entailing a persistent and sharp pick-up in food prices.
In the US, food price inflation averaged +1.7% between 2010 and 2019, in the past three years it averaged +6.2%. The comparable figures for Ireland are -1.3% and +6.4% respectively, which suggests an even starker regime shift and a correspondingly larger shock to household budgeting..
The graph below puts some colour on the intensity of the price shock suffered by consumers in recent years and the dramatic departure it marked from the earlier experience of price stability by focussing on a single staple food item that saw a radical change in pricing in recent years. It sets out the cost of a dozen eggs in the US and Ireland in recent years. For the US, the surge in costs driven by higher feed costs was sharply amplified by bird flu.
As a result, after a decade of virtually unchanged prices, the average cost of a dozen eggs in the US rose from $1.82 in October 2021 to $4.82 in January 2023. Although prices have fallen back somewhat, the October 2024 cost of $3.32 still represents a cumulative increase of 82% over the past three years.
Over the same three-year period, Central Statistics Office data indicate that the average price of a dozen eggs increased in Ireland by 25.8% (from €3.56 to €4.48). Incidentally, Eurostat data show that the average increase in egg prices across the Euro area over the past three years was 28.9% while, in the UK, egg prices increased by 45.6%.
Increases of this scale may be eggseptional (!), but in circumstances where most prices are rising materially, they tend to exert an outsized impact on consumer thinking as to how severe the cost-of-living pressures they face may be.
Although economists may rightly pay more attention to broader based and statistically robust measures of inflation, for the average consumer, and particularly for lower income and cash constrained households, the change in the price of staples such as eggs probably does more to capture the nature and degree of the cost pressures they currently face. To mangle the phrase coined by Bill Clinton’s strategist in the 1992 election campaign, it would still seem that it’s the economy, stupid.
For completeness in relation to sentiment developments in November, we should mention that Consumer sentiment saw a clear weakening in the Euro area sentiment that likely reflected concerns about possible policy shifts on the other side of the Atlantic as well as a pick-up in Euro area inflation and firmer fuel prices, while the collapse of the German Government may also have increased uncertainty closer to home.
Meanwhile in the UK, consumer sentiment rose unexpectedly, driven, in particular, by a step-up in purchase plans that is being attributed to ‘Black-Friday’ bargain-hunting. It also appears that British consumers’ immediate reaction to the UK Budget was less negative than envisaged while a further Bank of England rate cut in early November, accompanied by policy guidance that a ‘gradual approach to removing policy restraint remains appropriate.’ may have sustained expectations for a continued easing in borrowing costs in the UK.
November sees no major changes in Irish consumer thinking on economic and financial conditions
In keeping with the unchanged sentiment reading overall, there were only marginal and offsetting changes in the main elements of The Credit Union Consumer Sentiment Survey (in partnership with Core Research) between October and November.
A small weakening in views on the twelve-month outlook for the Irish economy might be considered a positive outcome in light of the extensive focus through the survey period of the downside risks to growth in general and the multinational sector in particular by the pronouncements on trade and tax rhetoric made by the incoming US president, Donald Trump.
Partly offsetting a weaker general economic outlook was a slightly better jobs outlook that likely owes something to a range of new job announcements and fewer reports of layoffs as well as the underlying strength of the jobs market signalled in labour force data for the third quarter.
Consumer thinking on household finances, both past and future changed little between October and November. Negative sentiment continues to dominate in spite of the easing in inflation of late. Indeed, an increase in motor fuel prices in November coupled with some recent pick-up in food prices in the latest official data and high profile increases in insurance costs likely tempered any sense that cost pressures may be easing meaningfully.
The most positive element of the November sentiment survey was in relation to consumers buying plans. In part, this reflects seasonal spending demands as Christmas approaches. It also likely owes something to a significant ratcheting-up of ‘Black Friday’ advertising promising substantial price discounts. Cost-conscious consumers are probably also aware of a significant easing in Christmas cost inflation as our analysis in section II illustrates. Finally, Government announcements as to exactly when ‘bonus’ welfare payments would be paid could have triggered related spending plans.
It remains the case that more consumers think now is a bad time rather than a good time to make major purchases, and the November reading is only marginally ahead of recent months. However, the latest improvement means this element of the survey is now at its strongest since early 2022. As a result, it may be signalling some likely modest improvement in Irish consumer spending before year-end.
Section II; sentiment survey suggests 2024 will see less of a ‘cutback Christmas’
As usual, the Credit Union Consumer Sentiment Survey (in partnership with Core Research) included a couple of supplementary questions on topics of current interest. As we have done regularly at this time in recent years, this month’s special questions focussed on planned Christmas spend.
As the graph above shows, fewer Irish consumers are planning to cut back on their Christmas spend in 2024 than in either of the past two years.
The clear sense that cost-of-living pressures are easing slightly rather than entirely over is indicated by the fact that the number of consumers planning to cut back compared to last year is still more than four times as many as the number planning to spend more.
Consumers outside Dublin, females and those aged between 45 and 54 were groups who were more likely to say they plan to cut back on spending than others. Not surprisingly, planned cutbacks reduced as the income profile of consumers rose and those reporting difficulty making ends meet were three times as likely to say they plan Christmas spending cutbacks as those who do not face such difficulties.
Consumers based in Dublin, those on higher incomes and those aged under 25 were more likely to be among the comparatively small number planning to increase Christmas spend this year. Males were three times more likely to plan higher Christmas spending this year than females.
Christmas cost inflation may be easing
One reason why consumers may feel that there may be less need for cutbacks this Christmas is that the cost of Christmas-related spending, as well as other demands on the household purse, may not be increasing nearly as fast as in recent years.
While spending priorities vary widely from household to household and the relative importance of various items in the shopping basket changes accordingly, we repeated a purely illustrative exercise mapping out what various Christmas-focussed items might cost using October consumer price data from the Central Statistics Office. (Note this exercise is based on official price data and our own very rough assumptions about the relative importance of key elements in Christmas outlays rather than the consumer sentiment survey itself. It should also be pointed out that Christmas spend notably omits any outlay on energy costs).
As the table below suggests, falling clothing and toy prices together with much slower increase in food and restaurant costs mean ‘Christmas inflation’ in Ireland in 2024 seems set to be much lower than in 2022 or 2023.
If cost pressures are less intense now than a year ago, it may be instructive to ask how Irish consumers plan to finance their Christmas spending. As in previous years, we asked consumers how they would pay for additional seasonal spending. The responses are shown in the diagram below.
As the diagram indicates, Irish consumers expect to fund their Christmas spend in a very similar manner in 2024 to previous years.
Roughly half of consumers will fund Christmas through their income while about a third will draw on savings. Nearly one in ten are unclear as to how their Christmas spend will be financed. While the numbers involved are small, there is also an increase in the proportion of consumers relying on financial support from family and friends for Christmas.
Not surprisingly, the proportion of consumers funding their Christmas spend from income is far lower among those facing difficulty making ends meet and, equally unsurprisingly, this response increases in frequency alongside the respondent’s income. Those aged under 24 are more likely to say they will rely on support from family and friends while those facing difficulty making ends meet are more than twice as likely to rely on this source of funds as other groups.
Those who say they are having difficulty making ends meet are four times more likely to say they do not know how they will fund Christmas spend this year. Perhaps surprisingly, the age group most likely to say they do not know how they will pay for their Christmas outlays are those aged between 45 and 54.
The broad picture painted by the special questions this month is one where most Irish households plan a Christmas that is cautious rather than carefree or cancelled at either extreme.
That said, the survey also suggests that significant numbers of Irish consumers either plan to cut back, are relying on family and friends or don’t how they will pay for Christmas. While economic conditions at the ‘macro’ level have clearly improved, it seems that Christmas 2024 will be a time of wonder for some Irish consumers and worry for others.
The Credit Union Irish Consumer Sentiment Survey is a monthly survey of a nationally representative sample of 1,000 adults. Since May 2019, Core Research have undertaken the survey administration and data collection for the Survey. This tranche of the survey was live between November 6th and 16th 2024.