Growth in Irish consumer spending gathered momentum at the start of 2018, according to Visa's Irish Consumer Spending Index, which measures expenditure across all payment types (cash, cheques and electronic payments). The index signalled a +5.3% year-on-year expansion in household expenditure, up from the +4.9% increase seen in December. Moreover, the rate of growth was the fastest for a year-and-a-half. The rise was also stronger than the average since the series began in September 2014.
Continuing the recent trend, overall growth in Irish consumer spending was led by Face-to-Face expenditure. January saw a +7.3% year-on-year expansion in spending on the high street, the most marked increase since February 2016. Face-to-Face expenditure has now risen in each of the past five months.
The resilience of Irish consumer spending is in stark contrast to the situation in the UK, where there was a disappointing start to the year as consumer spending fell for the fifth month in a row on an annual basis, with households continuing to face rising living costs and lacklustre wage growth. Overall consumer expenditure in the UK fell by -1.2% year-on-year in January, with spending having now fallen in eight of the past nine months.
Returning to the Irish consumer spending data, eCommerce spending in the Republic rose again on an annual basis in January. That said, at +2.1% year-on-year, the rate of growth was weak relative to the series average and the slowest in the current three-month sequence of expansion.
All eight monitored sectors in Ireland saw expenditure increase during January, the second time in three months in which this has been the case. The sharpest expansion was recorded in the Household Goods category, where spending was up +13.7% year-on-year. This was the quickest rise in 20 months. The category was closely followed by Recreation & Culture and Hotels, Restaurants & Bars, with expenditure up on an annual basis by +8.3% and +7.0% respectively.
There was also positive news for the Clothing & Footwear category, where spending rose by +6.2%. This represented the third successive month of growth for the category, with the latest expansion the strongest in almost two years.
Food & Drink recorded a rise in expenditure for the fifth month in a row at the start of 2018. At +3.4% year-on-year, the rate of growth was solid, but weaker than seen in December. The only category to have seen a fall in spending in December was Health & Education. This was more than made up for in January, however, with expenditure up +4.1% year-on-year. The Transport & Communication (+6.5%) and Miscellaneous Goods & Services (+3.9%) sectors also both posted increases.
Philip Konopik, Country Manager, Ireland, Visa said:
“January was another extremely positive month for Irish consumer spending, representing the strongest year-on-year growth for a year and a half. This is reflective of the continuing fall in unemployment and buoyant consumer confidence in the Irish economy, with shoppers demonstrating real resilience by continuing to increase their spending into the New Year. The ongoing revival of the Irish high street was a particular highlight, with the data recording the fifth consecutive month of year-on-year Face-to-Face growth, which made a significant contribution to the overall rise in Irish spending in January.”
Andrew Harker, Associate Director at IHS Markit said:
“Irish households appear to have started the new year in the same fashion in which they ended 2017, with expenditure up at a solid pace again in January. A positive economic environment both in Ireland and across much of Europe means that the prospects for further expansions in coming months appear bright. The high street continued its recent strong performance, a trend which can hopefully be maintained as the year progresses.”