Consumers are now more cautious due to Brexit concern
Households in Northern Ireland are feeling less confident about their finances than three months ago as Brexit uncertainty kicks in, a new report released today shows.
Consumer confidence in Northern Ireland fell in the last quarter of 2016 and was also lower than a year ago, according to Danske Bank's latest consumer confidence survey.
The Northern Ireland Consumer Confidence Index fell by five points in the fourth quarter of 2016 - finishing down three points on the same time in 2015.
The survey asks households about how they expect their financial position will change over the next 12 months.
Feelings surrounding job security were more positive, with two in three people surveyed saying they expect their job security to remain unchanged this year.
However, many seem to be becoming increasingly cautious, with almost one in 10 people saying they expect to save more than last year.
Danske Bank economist Conor Lambe said: "It seems that the uncertainty around the UK's decision to leave the EU is having an impact on consumer confidence. The latest quarterly decline in our index is larger than the more muted drop in confidence that followed the referendum in the third quarter of 2016.
"The low interest rate environment is helping to support households and it is likely that consumer spending will continue to rise this year. However, we think the rate of growth will slow and this view is supported by the drop in confidence levels shown up by the latest survey."
Over the quarter, there was a small decline on how consumers feel about their current financial position compared with a year earlier.
The data also shows people not in employment or education are feeling less confident about their finances compared to a year ago. Around a quarter of home-makers and retirees think that they are worse off compared with the same period last year, and this figure rises to 39% for the unemployed.
The consumer price index measure hit 1.6% in December during December - the highest since July 2014.
Mr Lambe said rising inflation was affecting consumers' outlook.
He said: "This sharp decline in confidence about future finances is not surprising. Inflation has been low for more than two years but it is now rising and is likely to move above the Bank of England's 2% target later in 2017.
"This higher inflation will squeeze real wage growth and put downward pressure on households' purchasing power.
"With price rises on the horizon, it is understandable that consumers may decide to put off larger purchases.
"However, consumers will still spend on smaller items and leisure activities, while overseas visitors to Northern Ireland may be able to take advantage of the weaker sterling to spend more."
Caution among consumers was also reflected by latest figures from the Registry Trust, which collects information on court judgments against indebted people across the UK.
Both the total number and value of debt judgments in Northern Ireland fell to the lowest levels on record during 2016, according to the organisation's latest figures.
There were 7,144 small claims judgments in Northern Ireland in 2016 - 15% fewer than the previous year.