Irish consumer spending broadly flat at the start of the year

Visa’s Irish Consumer Spending Index, produced by IHS Markit, which measures expenditure across all payment types (cash, cheques and electronic payments), signalled a subdued start to 2020 for Irish household spending.

Consumer spending was broadly flat in January, following a marginal expansion at the end of 2019. Overall, household expenditure fell by just -0.1%, after rising +0.9% in the previous month.

When split by channel, data for the opening month of the year signalled only fractional reductions in both face-to-face spending and online purchases. ECommerce expenditure was little-changed following a strong rise during December, which largely stemmed from the boost Cyber Monday provided to annual growth.

The year-on-year decrease in face-to-face spending, at -0.2%, was the slowest in the current sequence of decline that began in September 2019.

At the sector level, the majority of segments registered a rise in expenditure, with only Clothing & Footwear (-1.3%), Household Goods (-0.2%) and Miscellaneous Goods & Services (-1.7%) recording a drop in spending. Although only slight, the year-on-year fall in Household Goods expenditure was the first since last September.

For the third successive month, Hotels, Restaurants & Bars (+4.9%) saw the strongest increase in spending, with the rate of expansion quickening from that seen in December.

Philip Konopik, Ireland Country Manager, Visa said: “Levels of consumer spending were muted at the start of the year, reflecting a trend we have seen in recent months where growth in expenditure has plateaued. The fractional reductions in both face-to-face spending and online purchases in January reflect the fact that the majority of retailers begin their sales in December now. Despite this, it should be noted that the majority of sectors saw small rises in spending, with Hotels, Restaurants & Bars the standout performer after recording the highest level of growth.”

Sian Jones, Economist at IHS Markit said: “Irish consumer spending was little changed compared to a year ago in January after last December’s figures were boosted by the timing of Cyber Monday. While there was a relative improvement for High Street retailers, where spending edged closer to stabilisation following a lacklustre Christmas period, eCommerce expenditure was broadly flat after a marked expansion in December.”