Irish consumer sentiment falls sharply in January on COVID-19 spike

© Reuters. Outbreak of the coronavirus disease (COVID-19) pandemic in Galway

DUBLIN (Reuters) – Irish consumer sentiment dropped sharply in January as the country went from having the lowest COVID-19 infection rate in the European Union before Christmas to one of the highest in the new year, a survey found on Wednesday.

The KBC Bank consumer sentiment index dropped to 64.9 in January from a nine-month high of 74.6 in December. That compares with the 2020 average of 65 and a pandemic low of 42.6 registered during the worst of the first wave of infections in April.

The survey’s authors said the fall was sharp, but “somewhat smaller than might have been feared” after COVID-19 infection rates hit all-time highs, with optimism about the vaccine roll-out a possible factor.

“It might be suggested that consumers are assessing the current elevated virus readings in the context of both the greater than expected resilience of the Irish economy and associated positive household income developments,” said KBC Ireland chief economist Austin Hughes. 

“The likelihood is that both consumer sentiment and recent statistical releases are signalling that the impact of the pandemic on the Irish economy has at least thus far been a good deal less awful than feared,” he added.

Ireland went from reporting an average of around 300 cases of COVID-19 per day in mid-December to a peak of 6,500 in early January following an easing of public health measures during Christmas and the appearance of a more transmissible strain of the virus.

The daily average has since fallen to around 2,000 following the imposition of a national lockdown that is set to keep the hospitality sector and most shops closed until at least early March.

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Ireland’s Central Bank last week estimated that personal consumer expenditure fell 8.3% in 2020 and would grow 2.1% this year.

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