Consumer sentiment dipped in February, according to the latest survey from KBC Bank Ireland.
The drop was blamed on the increase in living costs experienced by households in recent weeks, as well as rising concerns about a conflict between Russia and Ukraine.
Consumer sentiment fell to 77 in February – down almost five points on January but more than two points higher than December 2021.
It is also considerably higher than the February 2021 reading, when tight pandemic restrictions weighed on the public mood.
The fall came as consumers took a more pessimistic view about the current economic circumstances, as well as the outlook for the economy.
People were also more downbeat about their personal finances and their prospects in the year ahead.
However there was considerably more optimism about employment in the country, reflecting better-than-expected data in recent months.
“The step-up in concerns around living costs and the heightened nervousness around developments in Ukraine evident in the February survey are simply the latest symptoms of an increasingly volatile environment in which ‘known’ concerns-such as living costs – can markedly increase while ‘unknown’ sources of risk-such as Ukraine – can materialise out of nowhere,” said KBC Bank Ireland’s chief economist Austin Hughes.
The month’s survey also included a supplementary question relating to the savings amassed by some during the height of the pandemic, which indicated that there would not be a spending boom as the economy returned to normal.
It found that 17% of consumers would keep their savings as a ‘rainy day’ fund, while 15% had already spent their pandemic savings on day-to-day purchases.
A further 11% had already spent their savings on specific goods or services, like home improvements or a holiday. Meanwhile a further 11% had their savings ear-marked for a specific, long-term purpose like a house purchase or education.
The survey also found that a third of consumers did not build up any additional savings during the pandemic.