Nervous consumers save more as cushion against rising prices

Food inflation is now well into double digits. Photo: Getty Images/iStockphoto

Charlie Weston

THOSE with spare cash are stuffing more of it into savings accounts, with the cost-of-living crisis the top concern for consumers.

One in three people have cited inflation as their top worry, in a survey commissioned by Bank of Ireland.

The concern about costs means three out of four people are now saving regularly, the survey found.

It was the third time in a row that the Bank of Ireland’s Savings and Investment Index found that raging inflation is the top worry for householders.

The index, conducted by Ipsos among 1,000 people, found that 74pc of respondents said they were saving regularly in February, compared with 68pc in November.

And the survey found a rising interest in investing some of the savings, despite the fact that consumers recognise that the investment environment remains challenging.

Banks in this country have been heavily criticised for only announcing small increases in deposit rates for savers, despite seven European Central Bank rate rises. This is possibly why more savers are now considering investing spare funds.

The Bank of Ireland’s Savings and Investment Index was 86 in February 2023, compared with 87 in November 2022 and 96 in February 2022.

There was a dramatic rise in saving after Christmas as belts were tightened after the festive splurge, the index compilers said.

The year began with one of the best performances in January from both equities and bonds, but February saw those gains largely given back.

Against that backdrop, the survey showed a record high incidence of investing but a record low investment amount.

Almost half of respondents saw the current environment as a poor time to invest in the latest survey.

However, when asked to look forward to six months’ time, the mood changes very considerably.

Just one in three see six months’ time as a bad time to invest, and a quarter saw it as a good or very good time.

Chief investment strategist with Bank of Ireland Kevin Quinn said: “For the third survey in a row, the cost-of-living crisis was the top concern for Irish households and it increased this time to one in three households.

“While inflation has been falling since November and market expectations are that inflation will fall to somewhere close to 3pc to 4pc by this time next year, this has done little to ease the concern for consumers.”

Mr Quinn said the index shows there is a recognition among Irish consumers of the value of regular savings.

But the cost-of-living crisis continues to put this down the priority list, he said.