CONSUMER SENTIMENT HAS dropped to its lowest level in almost six years ahead of the looming Brexit deadline of 31 October. 

The KBC Consumer Sentiment Index has fallen to 75.3% in September from 77.2% in August. 

While the drop in confidence in September was notably smaller than in either of the two months previous, it was still sufficient to push the sentiment reading to its lowest level in nearly six years. 

The last time the Index was lower than at present was in November 2013 when it stood at 71%. 

The decline in Irish consumer sentiment in September stands in contrast to modest monthly improvements in similar confidence indicators elsewhere, according to KBC’s chief economist Austin Hughes. 

In the US, consumer sentiment partly reversed a significant drop seen in the August reading.

For the Euro area as a whole, the rise in consumer confidence in September marginally exceeded the drop recorded in August.

Even in the UK, consumer confidence edged higher in September, led by in perceptions of household finances. 

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The contrast between September 2019 sentiment readings for Ireland and elsewhere seems to reflect two related factors, according to Hughes.

Firstly, in terms of the factors influencing confidence among Irish consumers at present, it seems that Brexit concerns are not the main issue, they are the only issue, he said. 

Secondly, he said unlike their counterparts in other countries where the mood of consumers is being buffeted by uncertainty, Irish consumers appear now to be almost exclusively on downside risks. 

Four of the five main components of the KBC Irish consumer sentiment were lower in September than in August. 

The only element to improve was consumers’ assessment of the buying climate which rose marginally.

“Whether Irish consumer sentiment has now reached peak Brexit gloom depends how still volatile political conditions in the UK develop and how related decisions translate into economic outcomes in the months ahead,” Hughes said.

“This implies Irish consumer sentiment and the broader Irish economy may be approaching a pivot point that will see sentiment and spending growth deviate materially from their current paths and either rise or fall markedly depending on the course Brexit takes and the response of Irish and EU policymakers.”

The KBC Consumer Sentiment Survey is conducted monthly with a nationally representative sample of 1,000 adults.