Consumers fear 'worst of cost-of-living crisis to come' 

Of those who intend to reduce their spending, a quarter said they will have to do so to make ends meet. Picture:Leon Farrell/Photocall Ireland

The majority of consumers fear the worst of the cost-of-living crisis is yet to come, putting the brakes on any future spending plans.

The Credit Union Consumer Sentiment Index for May found 60% of Irish consumers do not believe peak price pressures have passed, while 22% are confident the worst of price inflation is over. 

As a result of their fears, very few consumers plan to increase their spending in the near term, and most are planning further cutbacks.

Some 63% of those surveyed plan on reducing their spending further in the coming months, compared to just 3% who intend to spend more. 

Analyst Austin Hughes said household finances remain under pressure, which is weighing on spending plans.

Of those who intend to reduce their spending, a quarter said they will have to do so to make ends meet.

However, consumer confidence has rebounded since last year, hitting a 14-month high, which Mr Hughes attributes to recently reported projected budget surpluses of €65bn over the next four years.

One explanation could be that an improving economic tide is seen lifting all boats, but it may be more plausible that some consumers expect that one consequence of the fiscal windfall will be additional support measures in the upcoming Budget 2024.

Despite this, Mr Hughes said Irish consumers remain “scarred” by the financial crisis of just over a decade ago, and this is reflected not only in surveys but in “swollen” savings rates.

He said the survey suggests that a “fear factor” is still strongly influencing Irish consumer behaviour, and is a driver of the increase in household deposits.

The survey comes as Social Justice Ireland called for changes to social welfare payments in the coming budget.

Social Justice Ireland said the Government must increase core social welfare rates by €25 “if it is to have any impact on reducing poverty and meeting its own targets.” 

Research and policy analyst Susanne Rogers said income adequacy cannot be addressed by one-off measures, adding that adequate levels of social welfare are essential to addressing poverty.