Weak growth (+1.5%) in Irish Consumer Spending Ahead of Budget

• September’s overall rate of expansion was the weakest in the past six months
• Household goods continued to see strong growth, remaining the best performing sector, posting a +9.5% year-on-year rise
• Face-to-face spending continued to rise, but at a slower pace, of +1.1%

Dublin, 17 October 2018: Visa’s Irish Consumer Spending Index, produced by IHS Markit, which measures expenditure across all payment types (cash, cheques and electronic payments), has revealed that spending in Ireland rose at a slower rate during September, ahead of the 2019 Government Budget being announced. Compared to a year earlier, expenditure rose by +1.5% year-on-year, down from +2.2% in August. Although growth has now been recorded in each of the past 19 months, the latest rise in household expenditure was the weakest recorded since March 2018.

Increases in spending were seen across both Face-to-Face and eCommerce in September. The high street registered growth, for the thirteenth successive month, of +1.1% year-on-year. That said, this rise was less marked than recorded in August (+2.1%). A solid annual increase in online spending was also seen in September (+2.3%), although the rate of growth slowed for the fifth successive month and was the slowest since January of this year.

Of the eight broad categories covered by Visa’s Irish Consumer Spending Index, the strongest growth was again seen in Household Goods (+9.5%). Hotels, Restaurants & Bars also experienced a robust rate of expansion (+8.2%), whilst there was a notable gain seen in Recreation & Culture (+4.5%).

Solid growth was recorded in Food, Beverages & Tobacco (+2.8%) and Transport & Communications (+3.2%). But there were falls in spending elsewhere: Clothing & Footwear recorded a decline (-2.2%) for a third month running, whilst expenditure decreased again in both Health & Education (-2.9%) and Miscellaneous Goods & Services (-4.0%).

Philip Konopik, Ireland Country Manager, Visa said:

“The weak growth in spending recorded in September marks potential concern from Irish consumers, which aligns with the recent drop in consumer confidence reported elsewhere - amid factors such as the recent Budget announcement and ongoing Brexit negotiations. There has been mixed performance across the categories this month. While it is positive to see sectors such as Household goods, Hotels, Restaurants & Bars and Recreation & Culture post continued and robust growth, it is slightly concerning to see other categories such as Clothing & Footwear record a third month of contraction.”

Andrew Harker, Associate Director at IHS Markit said:

“While consumer spending continued to rise in Ireland at the end of the third quarter, the recent patch of relatively modest growth continued, with slower increases seen across both the Face-to-Face and eCommerce channels in September.

Conditions in the Irish economy are generally supportive of further increases in expenditure in coming months, but confidence among consumers weakened in August, potentially leading to a reluctance among households to spend.”