Despite rising levels of consumer confidence across the country, there was no seismic surge in spending through to Christmas, but rather a sustained level of growth in demand.
According to the latest MasterCard SpendingPulse™, produced on behalf of the four Dublin Local Authorities, the value of retail spending in Dublin increased by 0.9% QoQ and 3.4% YoY in Q4 2023. While this maintains upward momentum in the sector, it is broadly in line with the preceding quarter.
The Entertainment sector – consisting of hotels, bars and restaurants – was the main driver of QoQ growth in the Capital with an expansion of 2.4%. This was followed by Necessities (+1.5%) and Household Goods spending (+1.3%), the latter of which has remained remarkably resilient over the past two years. Discretionary spending was the sole category in which a contraction was seen in Q4. A reduction in expenditure in department and clothing stores of 1.1% QoQ was the third such contraction in 2023 and indicates that consumers may have tailored their spending patterns in the face of inflation and rising interest rates throughout the year.
Entertainment was also the primary driver of YoY growth in the quarter with an increase of 9.5%. This may partially reflect the sector’s restored VAT rate of 13.5% being passed through to consumers from September 2023 onwards. Necessities spending also increased at a robust YoY rate of 5.6% in Q4. This is likely related to food price inflation which exceeded 5% in each month of 2023. A more modest growth rate of 2.8% YoY was recorded in Household Goods expenditure in Q4. Discretionary spending reduced YoY (-1.9%) for the first time in three years. eCommerce spending increased at the weakest YoY rate (+3.4%) since the series began in what may be a signal of maturing demand after consecutive quarters of remarkable expansions.
Mastercard SpendingPulse: Total Spend
US Tourist Spending Contracts Sharply in Q4
Tourism spending in the Dublin economy contracted in Q4 2023 in what was a disappointing conclusion to the year. While expenditure increased by 5.7% YoY, it contracted by 1.7% QoQ – the first such reduction since early in the Covid-19 pandemic. The US market – which is critical to tourism across the country – continued on an unsteady path with a contraction of 16.4% QoQ, after an expansion of almost a quarter in Q3. Despite the slowdown in the US market, QoQ growth was recorded in Dublin’s other key tourism markets with expansions in the French (+13%), UK (+8.6%) and German visitor markets (+4.6%). Spending patterns were broadly stable amongst Chinese visitors in the quarter (-0.4% QoQ).