Almost a third of Irish consumers expect to cut spending as inflation bites

Some 32 per cent Irish consumers expect to cut back spending on products and services over the next six months as day-to-day living costs soar amid rising inflation globally, according to a new survey.

The PwC survey of 504 Irish consumers — part of a global study involving 9,000 individuals — also found that 94 per cent of people in the State say that recent price increases have affected their purchasing power. Some 36 per cent said that the recent price increases are affecting affordability to “a great extent”.

About half of Irish consumers have also experienced problems securing certain products in the past six months due to them being out of stock as supply chain issues have become a global problem, PwC reported. This comes amid uneven reopening of economies and manufacturing bases following the worst of the Covid-19 pandemic, compounded by the effects of the Russia-Ukraine war.

Over four out of 10 say they are shopping at different retailers to meet their needs, broadly in line with a global trend, while 31 per cent are using comparison websites to check product availability.

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“Just as consumers continue to change their shopping behaviours and preferences, actively searching for the best shopping experience and choice, retailers and manufacturers must move quickly to meet shifting demand and their own inflation and supply chain pressures,” said John Dillon, leader with PwC Ireland’s retail and consumer practice.

“We don’t see these pressures easing anytime soon. Agile businesses that can manage through multiple disruptions while keeping their focus on the demands of their customers are in the best position to succeed in this tumultuous environment.”

With Irish consumer prices soaring at an annual rate of more than 8 per cent, thousands of people took to the streets of Dublin, Cork, Galway, Limerick and Sligo on Saturday afternoon protesting over the cost-of-living crisis and calling for more supports in the face of sharply rising inflation.

The Economic and Social Research Institute last week reported that 29 per cent of Irish households are now living in energy poverty, which is defined as households spending more than 10 per cent of their net income on gas, oil and electricity, where prices are soaring.

The Government has so far resisted calls for a so-called “mini budget” in advance of the autumn to roll out further measures. However, it has rejected claims that it has been slow to act on the issue, pointing out that the steps it has taken to tackle cost-of-living pressures since last October add up to €2.5 billion.

Meanwhile, the PwC survey highlights how consumers have made a fundamental change in their lifestyle and purchasing habits as a result of the pandemic.

Due to the pandemic, 69 per cent of Irish consumers surveyed said they have increased their shopping online, which is slightly higher than the 63 per cent global rate. Some 57 per cent in the Republic increased their buying from local retailers, compared to 36 per cent globally.