Irish consumer sentiment weakens, wiping out recent modest gains

FILE PHOTO: COVID-19 restrictions continue to ease in Dublin

DUBLIN (Reuters) - Irish consumer sentiment weakened for the first time in five months in August, a survey showed on Thursday, wiping out the modest gains of the previous three months.

The Credit Union Consumer Sentiment index fell to 62.2 from 64.5 in July. The index stood at 77 in February 2022, before Russia's invasion of Ukraine, and dropped to a 14-year low of 42.1 last September.

Consumer thinking on the outlook for household finances through the next 12 months was the element that saw the largest monthly drop in August, the survey's authors said.

While consumer sentiment has been muted for the last 18 months, the Irish economy expanded 9.5% in 2022, faster than any other in the European Union, and is expected to expand at a more modest pace this year.

"The pullback in sentiment in August isn't entirely surprising," the report's author, economist Austin Hughes, said.

"Although the Irish economy and consumer spending power have avoided the collapse feared in the 14-year low seen in the survey in September 2022, the global economic outlook remains at very best uncertain, and many Irish households remain under significant financial pressure."

In an additional set of questions, roughly two-thirds of respondents said European Central Bank rate increases have had a negative impact on their household finances, with almost three out of four expecting the recent unprecedented series of rate hikes to damage the Irish economy.

(Reporting by Padraic Halpin; Editing by Bernadette Baum)