Visa’s Irish Consumer Spending Index, which measures expenditure across all payment types (cash, cheques and electronic payments), revealed that Irish household spending rose +2.5% year-on-year in August, with the rate of expansion unchanged from that seen in July. Household spending has now seen an increase year-on-year for the past six consecutive months. The latest expansion, however, remained weaker than the average (+4.8%) since the series began in September 2014.
August data signalled a widening divergence between the two categories of spending – eCommerce and face-to-face. The former signalled a sharp and accelerated increase in expenditure. At +11.5% year-on-year, the rate of growth was the fastest since March and broadly in line with the series average.
In contrast, face-to-face expenditure continued to underperform, seeing a decline in spending for the eleventh successive month. In addition to this, this month’s rate of decline, at -2.0% year-on-year, was the most marked since May.
The best-performing sector in August was Household Goods (+10.8%), where the rise in the growth was the highest seen in that category since May 2016. Clothing & Footwear saw a continued revival in spending at +5.5%, which marked the highest rate of expansion in 15 months and the third month of faster growth.
Slower rises in spending were recorded in both the Recreation & Culture (+2.9%) and Hotels, Restaurants & Bars (+1.0%) sectors. August marked a return to growth for the Health & Education and Transport & Communication categories, posting solid increases of +5.0% and +3.4% respectively.
The only category not to see a rise in spending was Food & Drink where spending was completely unchanged year-on-year. This ended a five-month sequence of rising consumer spending in this sector.
Philip Konopik, Country Manager, Ireland, Visa said:
“This month’s Consumer Spending Index continues to post a picture of positive growth, with eCommerce at the heart of the expansion. The increased popularity of online shopping has not necessarily come at the expense of the traditional bricks and mortar of the retail sector, with many businesses incorporating electronic payment methods. For example, people are using apps on their smartphones to pay for goods and services like taxis or takeaways, where they would only have been using cash in the past. Needless to say that it is vital that merchants need to ensure that they are able to accept digital payments or run the risk of missing out on sales.”
Andrew Harker, Senior Economist at IHS Markit said:
“Irish consumer spending continues to tick along nicely, with further solid growth recorded in August. Falling unemployment, higher earnings, rising confidence and muted inflationary pressures are all providing support to spending at present. Sterling weakness could again be playing a role in household spending decisions. A surge in eCommerce growth contrasted with a faster fall in high street spend, with consumers potentially looking online for savings. Particularly pleasing this month was a further pick-up in growth in the Clothing & Footwear sector, continuing the recent recovery.”