AGGRESSIVE PRICE CUTS by high street retailers failed to get shoppers spending in July, according to the latest economic research by the ESRI and KBC Bank.
The KBC/ESRI Consumer Sentiment Index fell from 56.3 to 55.9, as consumers opted to keep control of their cash for fear that the growing debt crisis in Europe and worldwide would have an impact on their own finances.
The three-month average of the index fell by a greater, though relatively modest, amount – dipping from 57.9 to 57.2.
In a press statement, KBC’s chief economist Austin Hughes said consumers’ concerns were drive by fear over the future of the global economy, which meant they felt uneasy about parting with their own cash.
Though consumers may not have understood the full chain of events that had led to the current crisis, it said, they knew enough to be wary of a further impact on their own pay packets.
Hughes noted, however, that the index still remained well above its all-time low of July 2008. Ratings above 50 are considered to be a sign of economic growth, with ratings below that number deemed to indicate a shrinking market.
“Customers may no longer be traumatised in the manner they were when the crisis began three or four years ago, but they don’t feel they can put the crisis behind them in a manner that would support sentiment and spending,” Hughes said.
A comparable index measuring consumer sentiment in the US reached its lowest level in two years in July 2011, while in the Eurozone consumer confidence has posted its largest monthly drop since December.
ESRI research published yesterday showed that consumers had increased their monthly savings, fearing that a further lapse in the economy might find them taking home smaller pay packets.
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