War and inflation top worries for Dubliners

by Rachel Cunningham
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Rachel Cunningham

Bank of Ireland has reported a significant drop in its savings and investment index in this year’s second quarter (April, May, June), with consumers now citing the war in Ukraine (32 per cent) and inflation (22 per cent) as their biggest worries.

There has been a dip in consumers who are saving regularly, a reduction of seven per cent between May and February, and investor confidence has dropped as markets fell back. With inflation rising, this drop in the proportion of consumers saving regularly may suggest that they are dealing with inflation by dipping into their savings and that they recognise that with interest rates at near zero, savings may lose real value.

Consistent with international surveys, Covid-19 is no longer topping the list of concerns, cited by just one in 20 as their biggest concern, below cost of housing (13 per cent), climate change (11 per cent) and global recession (11 per cent).

The index also pointed to significant differences in concerns between generations. Inflation andmcost of living is most troubling for the core working population, aged 30-59, 27 per cent of whom cite it as their biggest worry.

This falls to 21 per cent among 16-29-year-olds, while just 15 per cent among those aged 60 and over cited inflation and cost of living as their main source of worry, with 46 per cent more preoccupied with the war in Ukraine. Over one in four of under 30s are most worried about the cost of housing and rent.

During the pandemic, the savings index rose considerably, reaching a high of 108 in March 2021. At the end of last year, attitudes to saving were close to normal levls but this has given way to a much greater focus on the cost of living, with the savings index now at 91, its lowest level since pre-pandemic times.

Less than four in 10 consumers now think it’s a good time to save, which is back to the level seen in February 2020 before Covid drove up savings, peaking at 55 per cent in May 2020.

The investment index fell to 90 this quarter from its peak of 101 in September of last year and down from 95 in February of this year. Behind this was a drop in the number of people who believe it to be a good time to invest, just 27 per cent last month, compared to a high of 36 per cent in June last year.

When asked to look forward six months, some consumers seemed more optimistic. While 32 per cent believed it would remain a bad time to invest, 29 per cent believed the invesment situation would improve. Despite this, 53 per cent believe they are not investing enough, which is only 2 per cent lower than February and higher than most scores since 2019.

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