It is clear that, in spite of some positive news, we are still gloomy about the cost of living crisis.
Inflation in our supermarkets has fallen from over 16 per cent to close to 2 per cent, while the cost of heating and lighting our homes has dropped substantially from the dizzying highs of 2023. The European Central Bank has cut interest rates – marginally – while the general rate of inflation has also fallen steadily over recent months.
But, even with all that and more, most studies suggest we’re not convinced we’re out of the woods yet.
In February, Amárach and Penneys published their annual Pulse of the Nation report which said Ireland was stuck in a “vibecession”, with people feeling worse off despite improving economic circumstances.
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It is far from vibecessions those of us who were reared in the eternally bleak 1970s and 80s – and 50s and 60s – were raised, but we are living in interesting times.
A couple of months later, Ipso/B&A released its Sign of the Times survey which declared that, collectively, we’re run ragged and struggling to put the enduring cost of living crisis behind us.
When asked if they had more or less money compared with 2023, just 12 per cent said more, while 60 per cent said they had less. A total of 62 per cent were “getting by” and one in five said they were “struggling”.
And now we have the Future Consumer Index published by EY earlier this month, and it paints a similar picture as those that came before it.
It is the 14th iteration of a global study carried out among more than 23,000 people in over 30 countries including Ireland.
The first index was conducted early in the pandemic and – obviously – health concerns were very much to the fore, but in more recent editions, money and the absence of it has become the most pressing concern.
There was a time when Irish consumers – unlike their US cousins – would have baulked at coupons, but in the new world we are all about them, albeit digital ones
The EY study shows people in Ireland are still under pressure, with 62 per cent of households extremely concerned about rising prices. This compares with 55 per cent globally.
When asked what the most specific concerns were, people in Ireland pointed to the cost of energy, groceries and healthcare.
It also seems that the crisis has changed our mindset at least to some degree with 92 per cent telling researchers they are trying to waste less food to save money, while 65 per cent are seeking to repair items rather than simply replacing them.
And while buying fresh and packaged foods, medical supplies and grocery staples have remained at current levels, a notable portion of those who took part are buying fewer clothes, shoes and accessories. Many people are also drinking less, with a view to saving a few bob.
A total of 44 per cent of those polled say they are planning to spend more time at home with a third expecting to up their at-home hosting and entertaining duties as the year progresses.
The research also echoes other studies that point to a shift away from brands to private-label products and we appear to be searching more for discounts.
There was a time when Irish consumers – unlike their US cousins – would have baulked at coupons, but in the new world we are all about them, albeit digital ones.
In the past six months, 60 per cent of Irish shoppers say they have used an online discount code, while 42 per cent have joined a retailer’s rewards programme, and 35 per cent say they have joined a mailing list simply to access a discount/voucher, the EY researchers suggest.
We’ll happily use the technology to do our own product research, but the human touch is really important and if something goes wrong we want to make sure that we can speak to somebody
The report also indicates that, while we are increasingly happy – or at least willing – to have technology do the work for us as we shop online, when things go wrong we want to talk to human beings.
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With a degree of understatement, EY Ireland’s chief economist Dr Loretta O’Sullivan says it has been “a tough period for many households”, but she adds that “there are grounds for cautious optimism about the future”.
She points to falling domestic energy prices – the cost of heating and lighting a typical Irish home over the course of a year has fallen by around €1,000 – as well as a slower pace of food inflation and a cut in interest rates from the ECB.
“These are welcome developments, as is the continuing strength of the labour market. Jobs are being created and wages are rising, signalling an uplift in consumers’ financial situations. This is reflected in our research findings, with 42 per cent of respondents expecting to be better off in a year’s time. All of which gives us reason to believe that consumer spending growth is in prospect for Ireland.”
Colette Devey is the consumer products and retail lead at EY Ireland and she says “cost of living challenges continue to be front of mind for both Irish and international consumers”.
She notes that, while consumers here remain acutely aware of their spending, the “focus on price is matched by continuing preference for both high quality and good value. To square this circle, we are seeing consumers acting more consciously and independently than in previous times”.
The rise of the “independent consumer” has seen brand loyalty “taking a back seat [with] the switch to own brands or cheaper versions of premium products continuing”, Devey says.
While there are clearly reasons to be cheerful, notably when it comes to electricity and gas bills, Devey says that, when EY researchers asked what people are most concerned about, energy is number one. She suggests that: “Until it’s actually in your pocket, it’s very difficult for you to actually feel really comfortable that the cost of living crisis is over. People are on the hunt for value for money they want to find the best product at the right price using technology to get access to discounts.”
She also points to an evolving and complex relation with tech and specifically AI.
“We’ll happily use the technology to do our own product research, but the human touch is really important and if something goes wrong we want to make sure that we can speak to somebody and we don’t want to deal with a chat bot to close out a particular issue.”
When asked if the next EY study – due out in October – might point to a happier consumer, she says it is too early to say for sure, but adds that she would “find it hard to believe that affordability would suddenly not be of concern to consumers in six months’ time and it is going take a while to get to the point where something other than affordability starts to step up”.
