Heading: Consumer Mood Monitor – July 2022 – Confidence in the Irish economy remains in the doldrums
Published by: Colm Finlay2022.08.09
Consumer outlook on the Irish economy remains mired at an historic low-point in the third quarter of 2022. Confidence briefly returned to a sense of optimism in January of this year, following the removal of most COVID-19 restrictions. However, war in Ukraine, and the threat of spiralling inflation and possible energy and food shortages, plunged confidence back to a level only seen during the depths of the financial crisis in 2009, and during the second COVID-19 lockdown in October 2020, with no recovery in confidence since then. Now, only 5% of Irish adults believe that the economy will improve in the coming six months.
Concerns around the economy are manifold with the great majority of Irish adults believing that disposable income, the cost of borrowing money, the cost of living, and the affordability of housing will all worsen in the second half of 2022. While still not overly positive, concerns around employment remain a lower priority for consumers, suggesting that thus far, fears are mostly around a crisis of price and affordability, rather than one of job losses.
The spectre of inflation and the rising cost of living has become all too real for consumers, with the highest level recorded in a decade saying they expect to have to increase their grocery spend in the coming six months. Consumers also expect to have to spend more on household energy bills, and on fuel. Accordingly, consumers are planning to cut back their discretionary spending, particularly on holidays and entertainment.
Also contributing to low consumer confidence are expectations that the pandemic is to worsen in the coming six months. Rising cases and hospital admissions has led to the highest level believing the pandemic will worsen since October 2020.
Consumers can be expected to tighten their belts in the coming six months, particularly as winter conditions further drive-up fuel and energy bills. 85% of Irish adults plan to make changes to their lives to cut back costs, however only a half have done so thus far. More cutting-back can be expected as we enter the autumn and winter, and the main areas that consumers plan to review are their grocery shopping, utility providers, and streaming and newspaper subscriptions.
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