The impact of inflation stalled the recovery in real consumer spending at the beginning of the year even as headline GDP growth continued to soar on the strength of multinational companies. While modified domestic demand – a more accurate reflection of economic activity – also grew by 11pc, on a quarterly basis it fell 1pc as consumer spending declined along with government spending and investment. Nominal consumer spending was 6pc higher relative to pre-pandemic levels, but real consumer spending fell 2pc when inflation was factored in, showing that higher prices are having a dampening effect on economic activity. “[The] data confirms that the Irish economy has rebounded strongly from its lockdown slumps, but that the recovery in real consumer spending stalled because of record high inflation in the opening months of the year,” said Goodbody chief economist Dermot O’Leary. “This result is very much at odds with the evidence of strongly positive economic momentum coming from other recent indicators such as yesterday’s tax receipts.”

Source: Irish Independent June 04, 2022 06:16 UTC