A tighter grip on purse strings as consumers fear the cost of living
Groceries & clothes spending set for hit in 2024
MORE consumers plan to cut back on essential items and on discretionary spending in response to recession fears and cost-of-living pressures.
Energy usage, groceries, and new clothes are the top three purchases that will be hit in 2024 as households try to keep their heads above water, new research on behaviour and attitudes has found.
But PTSB’S Reflecting Ireland report says that there has been a significant drop in the numbers who fear a recession is coming and that there is a “more positive public mood than this time last year”.
A PTSB spokesperson said: “Discretionary spending is at risk as people prepare to cut back on clothing, eating out and holidays.
“This is in response to cost-ofliving pressures. The research revealed a squeezed middle, the 45 to 54 age group, is more downbeat than other groups.
“The bank’s quarterly research of consumer behaviour and attitudes has also revealed a fall-off in people expecting the economy to get worse this year.
“Some 47% say it now, versus 63% a year earlier. Some 48% say the economy will improve or stay the same, up from 32% a year ago.”
He added: “However, the number of people who say they are worse off than a year ago remains high despite a reduction year-onyear (54% now versus 63% a year ago).”
EARMARKED
Amongst consumers who intend to curb their spending, some 60% earmarked reduced energy usage, and 53% said they will cut back on groceries.
And 68% will buy less clothes, 62% will eat out less, and 50% will cut holidays, as well as weekend breaks.
The bank’s spokesperson added: “This year, more consumers than last year are planning to cut back. This is both on essential items and on discretionary spending in response to cost-ofliving pressures.
“The percentage of people planning to cut back on essential items has risen from 66% to 71%.
“People in the 45-54 age group are most likely to cut back, according to the research.”
This squeezed middle is the most likely to feel worse off than last year, with 63% saying they feel this way versus a national average of 54% across all ages. And
48% of the 45 to 54 age group expects their financial position to deteriorate further, compared to the 37% average across all respondents.
The spokesperson said: “Some 57% are less confident in their ability to manage their finances compared to 45% across all age groups.
“They are also the lowest cohort to report having money left over at the end of the month (35% for this group versus 42% average across all age groups).
“The so-called squeezed middle is also more likely to cut back on essentials and discretionary spending.
“They are the least likely group to plan on investing in retrofitting (12% of this age group, versus 18% average across all age groups) or in buying a new hybrid or electric vehicle (11% versus 17% national average).
“Generally, some 71% expect to be able to save regularly or when there is money to spare in 2024.
“Those aged 25 to 34 are most likely to save (84% versus a national average of 71%).”
PTSB’S corporate affairs head, Leontia Fannin, said: “Our findings as we enter 2024 show a welcome improvement in general public sentiment towards the economy.
“But it’s clear that the so-called squeezed middle 45 to 54 age group is bucking the positive trend somewhat.
“It’s also clear that negative sentiment remains at high levels despite the more favourable pattern.
“This in turn appears to be driving a willingness to cut back on spending – both on essentials and non-essentials – as people struggle to get to grips with higher living costs.” And the research also found that 72% of people agree that Ireland is a good place to grow up in.
But only 56% thought it was a good place to grow old in, down from 61% last year.
Some 50% said the natural environment was one of the best things about living here, followed by our welcoming nature (47%), cultural strengths (37%), community values (34%) and sporting heritage (26%).
Claire Cogan, behavioural scientist at Behaviourwise, said: “Almost three quarters of us feel Ireland is a good place to grow up.
“It’s also interesting to note that those most likely to agree with this are aged 55 and over. This age group is also most likely to agree Ireland is a good place to grow old.”
“In short, those aged 55 and over most appreciate Ireland as a place to grow up and grow old.”