62% cutting back on food spending as prices rise – PTSB research
New research has found that 62% of people feel they will have to cut back on food spending over the coming year in response to sharp price rises, while 53% of people worry they will be unable to pay higher energy bills.
The findings are part of the latest in the Permanent TSB research series called Reflecting Ireland, which show consumer confidence falling as attitudes to personal circumstances and the economy are deteriorating.
It found the increases in the cost of living are now the dominant issue among 81% of consumers – up from 62% just three months ago.
Consumer pessimism is at its highest level for nine years. 53% of respondents feel they are less well off than they were a year ago, a huge increase from the 32% in January.
43% feel they will be less well off in a year’s time, up from 22% when asked three months ago.
Claire Cogan, a behaviour scientist and founder of the consultancy Behaviour Wise, said the rising cost of living is having a deep impact on how people are feeling and behaving. “Optimism is fading and anxiety is on the rise, which is a concern.
“There is evidence that people are adopting their behaviour to meet the challenges, but there is also evidence that many feel in a financially precarious position. It will be increasingly important over the coming months to build our financial resilience, as upward pressure on the cost of living shows no sign of abating,” she stated.
The research also examined consumers attitudes to switching. With Ulster Bank and KBC exiting the market shortly, the survey found the number of people considering switching their current account has doubled over the past year – from 12% last year to 23% this year.
For people with a mortgage, one in four (24%) are considering switching their mortgage over the next year. This contrasts with recent Central Bank and BPFI data on mortgage switching activity which shows just under 9% of mortgages were switched in 2021 with almost 4% switched in the first four months of this year.
The survey also showed far greater appetite among consumers for switching other services to save money. 55% of respondents said they plan to switch power or gas provider, up from 49% last year. 47% plan to switch car insurer, up from 38%, while 46% plan to switch TV or broadband provider, up from 38%.
Leontia Fannin, Head of Corporate Affairs at Permanent TSB, said: “The feel good factor that emerged as Covid-19 began to recede has clearly been halted by the recent surge in the cost of living and economic uncertainty arising from the devastating events in Ukraine.
“The cost of living issue is likely to dominate the thoughts of Irish consumers through the rest of this year and beyond and it is likely to have significant implications for businesses across the board.”
The research was conducted by Kantar in April among a representative sample of 1,002 people aged 18+. It was conducted online, with a margin of error of +/- 3.1%.
Paul Moran, Associate Director at Kantar, commented that “the unprecedented acceleration in inflation has to a certain degree, caught many consumers by surprise. We are now seeing a generation of consumers who have never experienced such a phenomenon.
“It is not just about the fiscal implications in the short term – there is a more deep-rooted emotional response; the fear of the unknown for many. They feel they are in uncharted territory but are now having to map a journey forward”.