A survey which assesses the mood of Irish consumers has shown a sharp fall for October amid worries about the effect of tighter COVID-19 restrictions on household finances and jobs.

The KBC Bank Ireland consumer sentiment index fell to 52.6 in October from 60.7 in September and now stands at the lowest level since May.

The monthly drop of 8.1 points in October is the second largest reduction in the past year, after a fall of 34.7 points in April in the wake of the initial pandemic restrictions.

If the pandemic-related slumps seen earlier this year are excluded, the index is now at its lowest level since December 2012.

Resilience

In a commentary on the findings, economist Austin Hughes said the “one small positive” was a relatively limited downgrade of household current finances and spending plans. This suggests “fear rather than fatalism is gripping Irish consumers at present”, he said.

The economist added that this sign of resilience in buying power might suggest the possibility of a significant bounce in consumer spending in the final weeks of the year.

Nervousness

All elements of the survey were weaker in October than in September, with the biggest fall seen in consumers’ expectations for their financial circumstances over the next 12 months. Mr Hughes said this is likely to reflect increased nervousness about the lasting impact of the virus and related restrictions on economic activity on income prospects.

He noted, however, that those surveyed after Budget 2021 were marginally less negative about the outlook for household finances than those who responded before.

The October survey also saw a deterioration in how consumers view the outlook for the jobs market. “It would appear that consumers sense a very palpable link between lockdowns and lay-offs,” Mr Hughes said.