A new survey shows that with households facing the prospect of even higher gas and electricity bills over the coming months, consumer confidence sank to an all-time low in September.
Bank of Ireland said its Economic Pulse came in at 70.6 in September. The index, which combines the results of the Consumer and Business Pulses, was down 1.8 on last month’s reading and 17.6 lower than a year ago.
The bank said that anxiety over energy bills hit households’ mood, while security of supply as well as cost concerns saw basic infrastructure – energy, water and waste – move up businesses’ priority list for public investment.
Bank of Ireland said its Business Pulse fell to 77.7 in September, down 0.7 on last month and 12.3 lower than a year ago.
Firms were generally more circumspect about near-term prospects for activity given the unsettled environment, with two thirds saying it is difficult to predict the future development of their business situation at present.
At 42.1 in September, the Consumer Pulse was down 6.3 on August’s reading and 38.9 lower than a year ago.
Bank of Ireland noted that households were more apprehensive about the economy and job prospects this month, and with energy bills for all and mortgage repayments for some on the rise, they were gloomier about their personal finances too.
One in three is just managing to make ends meet, though this varies across the income distribution. Bank of Ireland said the figure for households at the bottom end was 53% compared with 16% for those at the top end.
Meanwhile, the Housing Pulse came in at 99.8 in September 2022, down 1.6 on last month and 19.1 lower than a year ago.
Survey respondents pared back their expectations for future house price gains this month.
But with demand continuing to outstrip supply, 65% still think they will increase over the coming year compared to 68% in August.
Bank of Ireland said that housing infrastructure is important from a quality of life standpoint and also has a role to play in facilitating new ways of working and attracting staff from abroad, meaning investment in this area is relevant for firms as well as households.
Dr Loretta O’Sullivan, Group Chief Economist for Bank of Ireland, said that economic sentiment was down this month amid an intensification of energy woes.
“The unsettled environment tempered business sentiment, while concerns about the ability of Ireland and other European countries to keep the lights on this winter appear to have prompted some re-assessment of infrastructure needs,” the economist said.
“When firms were asked to identify the priority area for investment, one in five said basic infrastructure which covers energy, water and waste. This category has traditionally been at the bottom of the list in our survey but moved up the pecking order this month, ahead of telecommunications though it failed to dislodge housing from the top spot,” she added.