Cost-of-living crisis forces people to reduce spending on nights out and holidays

The latest Credit Union Consumer Sentiment survey shows there is a noticeable cutback on spending on going out and purchases of discretionary items. File picture

Consumers are cutting back on nights out, holidays, and leisure activities as the cost-of-living crisis continues to bite — but there is also growing evidence of a two-tier Ireland.

The latest Credit Union Consumer Sentiment survey shows the public is increasingly negative about their own household finances, but separate data from the Central Bank has highlighted a huge gulf between the wealthiest 10% of the population and the rest.

While overall household wealth has risen to a record €1.4 trillion, the Central Bank figures show the richest 10% of the country own nearly five times the wealth of the entire bottom half of the population.

At the same time, the Credit Union report says consumers are struggling to deal with the impact of rapid and repeated changes in geopolitical conditions. 

"The slight uptick in consumer sentiment is welcome, but the general tone of the August survey highlights the financial challenges facing many Irish households at present," said Irish League of Credit Unions chief executive David Malone. 

The credit union sentiment survey, which sampled 1,000 adults nationally, found that 65% of consumers are spending more now than a year ago on necessities such as food, as prices continue to rise.

A broadly similar 61% are spending more on household bills, but there is a noticeable cutback on spending on going out and purchases of discretionary items.

"The broad message from the August sentiment survey is that higher prices are causing Irish consumers to spend more on necessities and cut back in other areas while income growth has largely disappointed this year," the report warned. 

Notably, more women than men said their income had fallen, while those with difficulty making ends meet were more than twice as likely to experience reduced income.

The Consumer Sentiment survey comes as Ireland's largest health insurer VHI announced it will increase the price of its health insurance plans for most of its 1.2 million customers, with an average 2.75% increase in the price of its health insurance plans from October 1. 

For some plans, this could mean an annual increase of up to €150. VHI said demand for healthcare services and the cost of providing care continue to rise. 

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So far this year, the company has seen private hospital claims costs rise by more than 9%, while day-to-day healthcare claims — including GP, physiotherapy, and consultant visits — have gone up by approximately 14%.

There was some relief for consumers yesterday, however, as the Government confirmed it will postpone excise increases on petrol and diesel until November. 

The Cabinet also signed off on plans to extend the reduced National Oil Reserves Agency (Nora) levy until October 31. Ministers agreed that the Diesel Rebate Scheme would be extended until late December.

The excise cuts, 27 cents on a litre of petrol and 32 cents on a litre of diesel, will then be further unwound in January before being restored to their original levels in February.

"Our response is carefully considered and balances competitiveness and cost-of-living concerns with the need for sustainable budgetary policies," Taoiseach Micheál Martin said.

If rises had gone ahead on September 1, as planned, 9 cents would have been added to a litre of petrol, and 10 cents added to a litre of diesel. The delay is expected to cost €100m per month, with it being paid for through the Government running a smaller surplus.

The Central Bank household wealth report, published on Thursday, shows the rise in net wealth of Irish households was driven by a rise in the value of homes, pensions, and investments. 

The data shows the wealthiest 10% of Irish households owned €693.1bn, or 47.2% of total household net wealth in the country.