The KBC Bank Ireland/ESRI consumer sentiment index fell to 97.3 in October from 102 in September – its lowest level since February 2015.
Today’s survey showed that consumers’ outlook for the economy and jobs weakened modestly while their views on household finances also saw a notable downgrade.
KBC economist Austin Hughes said that consumers have become increasingly conscious of a growing array of downside risks, including Brexit, the Apple tax ruling and some high profile domestic disputes.
They also believe that the notably better “macro” economic conditions of recent years have failed to significantly reverse the deterioration in household finances seen during the downturn.
The most notable feature of the October survey was a sharp drop in consumers’ assessments of how their household financial circumstances had developed over the last year.
Mr Hughes said the run-up to Budget 2017 may have been the catalyst for the gloomier reading.
“The prospect of only marginal gains in Budget 2017 may have caused some consumers to focus on the limited extent to which the deterioration in their financial circumstances has been reversed several years into what is conventionally regarded as an exceptional Irish economic upswing and one that that may be less robust in the future,” Mr Hughes stated.
He said the survey also showed the significant difference between the reality of the current economic and financial circumstances facing people and the expectations they had formed as to how far and how fast their living standards would improve once the economy’s austerity period had ended.
Commenting on today’s survey, the ESRI’s Daniel Foley said the decline of the expectations component of the survey marks a continuation of consumer nervousness relating to the outlook for next year.
Mr Foley also said that consumers are increasingly finding it more difficult to assess the likely path of recovery over the next year.