Key facts
- Irish consumer sentiment index fell to 59.1 in July from 59.1 in June.
- Concerns about the cost of living, particularly food prices, are the main driver of the confidence drop.
- The threat of a 30% tariff on EU exports to the US has increased nervousness about Irish economic prospects.
- Food price inflation rose to 4.4% in June, with a three-month annualized rise of 7.6%.
Irish consumer sentiment experienced a slight decline in July, primarily driven by persistent concerns over the cost of living and the emerging threat of tariffs on European Union exports to the United States. The Credit Union Consumer Sentiment Survey recorded a reading of 59.1 for July, a decrease from June's 62.5, and significantly below the long-term average of 83.9. This dip brings sentiment close to the two-year low of 58.7 seen in April, which was also influenced by tariff threats.
Sub-indices measuring current economic conditions, consumer expectations, and the overall economic outlook all saw marginal decreases. The survey highlighted that 37% of consumers identified the cost of living as the most pressing issue facing the Irish economy, followed by the housing shortfall (19%) and tariffs/trade threats (8%).
Accelerating food prices, which reached their fastest pace in a year and a half with staples like beef and butter seeing substantial increases, are a key factor contributing to the heightened cost-of-living pressures. Consumers may also be reacting to indications that the upcoming October budget will not include significant offsetting measures. The threat of a 30% tariff on EU exports to the US, announced on July 12, has added to consumer nervousness regarding Ireland's economic prospects, given its exposure to such trade disputes.
In contrast to the dip in Irish sentiment, US consumer sentiment improved in July to its best level in five months, partly due to falling inflation expectations. The preliminary reading for Euro area confidence also picked up slightly. This divergence suggests that domestic factors and specific vulnerabilities, such as exposure to US trade policy, are playing a significant role in the weaker Irish sentiment.