Sentiment slumps in March as Irish consumers brace for higher costs and a weaker economy

Posted on: 27 Mar 2026

• Broadly based slide sees confidence drop to 3 year low

• Irish consumers concerned about an environment that is increasingly unstable rather than uncertain

• Sharp correction in buying plans as consumers expect significant hit to spending power

• Consumers downgrade outlook substantially but survey points to sharp slide rather than complete collapse in confidence

• Risks to a resilient Irish economy may centre on a surge in costs exposing pre-existing frailties 

• Survey hints that Irish consumers fear greater downside risks than suggested by economic forecasts  

Speaking on the release of the March 2026 data and analysis, David Malone, CEO of the Irish League of Credit Unions noted; "The recent fall in consumer sentiment reflects very real concerns among Irish households in the face of ongoing global uncertainty. In challenging times, credit unions stand ready to support members with financial guidance, education and practical assistance, to help people feel more confident in managing their money. That consistency of support is at the heart of what credit unions do every day".


 

Summary

Irish consumer sentiment suffered a substantial but not surprising fall in March to its weakest level in three years. The March survey paints a picture of a nervous Irish consumer whose thinking has become materially more negative of late.

The dramatic escalation in hostilities in the middle east in the past month means the environment facing consumers in Ireland and elsewhere is now notably more threatening in the sense that it is unstable rather than uncertain, with the immediate risk of a large and lasting deterioration in economic and financial circumstances.

The scale of the drop in the sentiment index between February and March is broadly similar to that seen in the wake of the announcement of increased US tariffs last April. This suggests that the March sentiment reading might be interpreted as a marked downgrade rather than a complete collapse in Irish consumer confidence.

The weakest element of the sentiment survey in March was buying plans, suggesting a notably more cautious and constrained approach to consumer spending in coming months.

In turn, this likely reflects the combined impact of the increased risk to economic prospects and an immediately more difficult reality in the shape of higher energy costs. Both of these elements weighed heavily on Irish consumer confidence in March.

How sharp and sustained the pullback in sentiment and spending proves will depend significantly on how large and lasting the fallout from war in the middle east proves to be and the extent to which Government support measures cushion the blow of higher living costs.

Sentiment survey slumps as attack on Iran threatens marked hit to economic prospects and consumers’ pockets

As the table below indicates, the Credit Union Consumer Sentiment Survey (in partnership with Core Research) shows an index reading of 56.7 in March, sharply down on the 65.2 figure for February and the lowest since March 2023.

How low is Irish consumer confidence now?

The March sentiment survey suggests a material downgrade by Irish consumers of their economic and financial prospects. The March reading is some significant distance below the thirty-year survey average of 83.4, and also clearly below the latest five-year average of 66.1, a period of significant geopolitical shocks.

It also marks a significant turnaround from a tentative and limited improvement of late that resulted in an eleven-month high in the February 2026 sentiment survey.

That said, the March reading remains well above the mid-2008 survey low-point of 39.8 or the more recent cyclical low of 42.1 seen when cost of living pressures were escalating sharply in Autumn 2022.

The month-on-month decline in Irish consumer confidence in March is the largest since that seen in April 2025 when the announcement of far-reaching US trade tariffs suggested a markedly poorer outlook for the Irish economy. While substantial, this scale of drop is not a complete outlier. The 8.5 point drop in sentiment in March 2026 is the fifth largest monthly decline in the past five years.

Drawing these elements together, we would interpret the March sentiment survey reading as suggesting that Irish consumers see recent developments weighing materially more on already challenging circumstances rather than representing a complete sea-change in the circumstances they face.

Some sense of how the sentiment survey reflects continuing difficulties for Irish consumers is given in diagram 1 below. The dark blue line shows the monthly sentiment reading is well below its long-term average but above recent low-points. The green line illustrates the experience of several negative shocks in recent years. 

Consumer fears vary on either side of the Atlantic …for now

The immediate reaction of consumers to the threat of notably higher energy costs and all that might imply for economic activity and consumer prices varied significantly across countries.

The drop in Irish consumer sentiment in March was notably greater than that seen in the preliminary reading of the corresponding US measure but that largely reflects the fact that about half of the US survey responses were taken before the dramatic escalation in hostilities in the middle east. (In contrast, the March tranche of the Credit Union Consumer Sentiment Survey for Ireland only commenced on March 4^th).

The US survey’s authors note that pre-hostility responses showed an improvement in sentiment that was subsequently reversed in later responses which emphasised weaker household finances and increased inflation expectations.

In stark contrast, the EU Commission noted that consumer confidence in the Euro area ‘plummeted’ in March, presumably reflecting major concerns around an energy driven surge in the cost of living.

As diagram 2 below illustrates, relative to the usual scale of monthly fluctuations in the two series, the drop in Euro area consumer confidence in March was somewhat larger than that seen in Ireland.
 

March survey suggests consumers fear higher energy costs will lead to a much weaker Irish economy
All five elements of the March reading of the Credit Union Consumer Sentiment Survey (in partnership with Core Research) were lower in March than in February. However, the degree of deterioration varied widely.

Not surprisingly, there was a marked worsening in Irish consumers thinking on the general economic outlook, with this element of the survey dropping to its lowest level since November 2022. Although Q4 economic growth data painted a generally positive picture of the Irish economy, these data have been completely overtaken by recent developments in the middle east and their implications for global economic activity and price developments.

With geopolitical conditions and comments changing repeatedly and rapidly of late, it is most unlikely that Irish consumers could readily quantify the likely impact of the war in the middle east on the Irish economy but the broad message of the March survey is that consumers see the conflict having a large negative impact on the Irish economy.

Interestingly, while the March survey did see a clear decline from February, Irish consumers marked down their expectations for the jobs market by notably less than their thinking on the broad economic outlook.

This differentiation may reflect the resilience of the jobs market and an already relatively downbeat assessment of the twelve-month outlook for employment. In addition, there may be a sense that the nature of this shock means the fallout from higher energy costs will be felt first and foremost in terms of spending power, with a greater hit to the demand side rather than the supply side of the Irish economy.  

A much poorer outlook for household finances causes consumers to cut back their spending plans
While all three elements of the sentiment survey related to household spending power and plans saw a clear decline between February and March, there were some subtle but important differences in the nature of these downgrades.

The smallest decline was in relation to consumer thinking on the evolution of their household finances through the past twelve months. On the positive side, inflation held steady at 2.7% while food price inflation eased to 3.4%, its slowest increase in ten months.

However, the March survey period also saw the release of household income data that implied the inflation-adjusted disposable income of the average Irish household was around 1% lower in the final quarter of 2025 than a year earlier and contrasting fiscal measures in Budget ’25 and Budget ‘26 suggest that weakening likely persisted in early 2026. So, continued negativity in consumer sentiment is scarcely surprising
in this regard.   

While there was a modest decline in Irish consumers thinking in relation to how their personal financial circumstances had evolved over the past twelve months, there was a much larger deterioration in their expectations for their financial circumstances over the next twelve months. This element of the survey declined to its weakest point since March 2022 when Russia’s invasion of Ukraine threatened a marked escalation in living costs for Irish consumers.

With motor fuel and heating oil rising rapidly through the March 2026 survey period and global developments suggesting the prospect of substantial increases in electricity and gas prices, Irish consumers appear to be bracing themselves for a major hit to their spending power as 2026 progresses.    

In turn, these threats of much more expensive energy and the spillover from this into higher prices in most other areas, coupled with the risk of a notable hit to Irish economic growth, meant Irish consumers became altogether more cautious in their spending plans in March. 
 

Can Irish consumers weather higher energy costs?

Repeated shifts in the prospects for an end to fighting in the middle east and related extreme volatility in global energy prices make it impossible to predict how much of a pullback in Irish household spending power might be seen over the balance of 2026.

If military action ends soon and energy markets return to their February pricing, Irish consumer sentiment and spending would move back quickly to their early 2026 trajectory. Most economic assessments of the impact of the attack on Iran understandably assume that energy costs follow market expectations of a retracement of the rise in energy costs as the year progresses. As a result, the economic fallout would be contained both in terms of scale and duration. 

If instead, there are large and lasting disruptions to energy supplies and a corresponding premium in energy pricing, there may be more significant downside risk to Irish consumer sentiment and spending.

By way of illustration (and abstracting from the impact of Government support measures), a 20% increase in domestic energy costs would likely reduce Irish households’ spending power by almost 2 percentage points directly or by around €1100 per household on an annual basis (Energy accounts for about 9% of actual spending by Irish households which is around €135billion-statistical adjustments boost the headline number for overall consumer spending materially).

The final magnitude of any economic impacts from increased energy costs depends heavily on how large the rise in energy costs is as well as well as how long it lasts. 

A sustained 20% increase in energy costs will be more than twice as damaging as a 10% increase because firms and households would be less able to absorb a larger hit to their bottom line and spillover impacts would also be materially larger. In the same manner, a short-lived spike will have negligible consequences compared to one that threatens to persist into 2027.   

A lasting uplift in energy costs will lead to spillover effects into other living costs that have the potential to raise the hit to Irish household spending power materially further. However, some element of this loss might be countered by adjustments in energy use or recourse to savings, but this will only be significant for a minority of households. 

We are likely to see a clear slowdown rather than a complete stop in Irish consumer spending if energy prices remain elevated and the current temporary Government supports are withdrawn. The full picture will only really become clear as we head into Autumn and heating becomes a much more important element in household spending.   

Given that official forecasts prior to the attack on Iran had envisaged Irish consumer spending increasing by a little over 2 per cent per annum in coming years, there is a significant prospect of a marked weakening in the trajectory of Irish consumer spending as 2026 develops unless the recent rise in energy costs is completely reversed.

Understandably, the March sentiment reading reflects some of this downside risk as Irish consumers are far more likely to form their opinions on the basis of news headlines and the reality of higher fuel prices at present as well as their own financial circumstances than on the signals given by futures markets. In that sense, it might be suggested that the March sentiment reading could be seen as a case of consumers fearing the worst rather than hoping for the best.     
 

Are current risks exaggerated or understated?

One consideration relevant to thinking about the likely damage to the Irish economy from an extended period of higher energy costs and their spillover effects is that the Irish economy and aggregate consumer spending have proven remarkably resilient in recent years in the face of a range of adverse shocks. 

One possibility is that the Irish economy is notably and ‘naturally’ more robust to such challenges.  That might suggest a healthy capacity to cope with the latest energy shock and may inform some forecasts suggesting relatively limited fallout from recent developments in the middle east.

Another possibility is that a sequence of negative shocks through recent years may have done more damage beneath the surface than most current ‘macro’ readings might suggest. The vulnerability to adverse developments would then depend significantly on the nature and extent of the shock suffered.

The continuing adverse impact of recent sharp cost pressures on the financial position of significant numbers of households and businesses means an energy cost surge at this time has the potential to be more damaging than might be thought.

With the ‘real’ income of the average Irish household likely now lower than it was five years ago, the risk of underlying financial frailties being exposed by a sustained sharp rise in energy costs presents a clear and present danger at the macro as well as the micro level.

Some very rough calculations we have made might suggest the broader macroeconomic fallout will be material if elevated energy costs persist through 2026 and beyond. The impact on activity and prices would worsen notably as this year progresses and the spillover from higher energy prices feeds into other costs.
Downside risks to economic activity and upside risks to prices could be amplified markedly by disruptions to global trade if related restrictions on transit through the Straits of Hormuz continue.

The approach of Autumn, when heating again becomes an important element of households and many businesses spending would aggravate difficulties further.

Our own admittedly crude 'back of the envelope' guesstimates suggest the annualised hit to Irish economic growth of a sustained 20% rise in Irish energy costs could be anywhere between 1 and 1.5 percentage points when direct and indirect effects are considered. Reflecting seasonal variations in energy demand and lags in pricing impacts, such losses would likely be split between 2026 and 2027.

In turn, unless global energy costs ease materially, this may require further flexible fiscal support that is notably larger and longer-lasting than the temporary measures taken in late March.
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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 month’s survey was live between the 4^th – 17^th March 2026.