Home Directory Deloitte Ireland LLP Consumer spending increases for third month in a row - Deloitte Report

Consumer spending increases for third month in a row - Deloitte Report

Average consumer spend in Ireland has risen for the third month in a row, up €45 to €2,577...

According to Deloitte’s latest State of the Consumer Tracker. Spending on housing remains the top item, but this dropped by 2% to 19% of overall spending month-on-month.

Spending on groceries, restaurants and healthcare all rose by 1% last month, with discretionary spending up 1.6% overall. However, plans to spend on recreation, entertainment and leisure travel recorded a 1% decrease to 9%, month-on-month. Overall, respondents did indicate that they planned to spend about a third of their budget on more discretionary categories over the coming month.

The number of consumers in Ireland who are not concerned by inflation rose by 2% to 11%, and 45% of those surveyed in Ireland now feel optimistic that the financial situation in the country will improve within three years. This compares with an average of 48% globally.

Deloitte’s State of the Consumer Tracker is a monthly survey which tracks Irish consumers’ attitudes towards personal wellbeing, financial concerns, travel and hospitality, transport and retail. The results are based on a survey of 1,000 consumers across 23 countries respectively (1,000 Irish consumers). The most recent data was gathered between 23 and 26 December 2021.

Commenting on the latest results, Daniel Murray, Partner and Head of Consumer at Deloitte Ireland, said: “We are starting out 2022 with renewed confidence that the worst of the Covid-19 pandemic has passed, with restrictions being lifted that will enable more economic activity - particularly in the hospitality and leisure sectors. These are areas that have suffered disproportionately in the last two years, and it will be widely welcomed to see much needed spend on the rise there.

“While just over one in 10 people are not concerned about inflation, it is evident that it is still a key consideration for many. CSO figures released last week show inflation of 5.5% at a 20-year high, and people will continue to face rising bills, particularly for their home heating and running vehicles. The trend of more consumers replacing in-person services with digital experiences continues apace and is likely to be a lasting legacy of the pandemic. In the past certain cohorts of people preferred to buy something in-store than online, but restrictions have shown them the convenience and ease of purchasing online. Many people will continue to enjoy in-person experiences, but businesses now need to offer that hybrid experience where possible, or they will lose out as a result.”

Consumer confidence

Safety concerns around in-person activities remain but have levelled off in some areas versus the previous month. The number of those feeling safe staying in a hotel saw the biggest decrease (down 9% to 48%), while those feeling safe taking a flight dropped by 6% to 33%. Almost half of those surveyed felt safe going to a restaurant (49%, down 1%) while only one-in-three felt safe about attending in-person events (32%, down 2%).

The number of consumers in Ireland who are replacing in-person experiences with digital services has increased by 4% to 44%. There was a 3% drop in the number of those concerned about making upcoming payments to 22%, while the number of those delaying large purchases was also down 3% to 46%. However, just over half of consumers are worried about the amount of money they have managed to save (52%, down 1%). The average number of days per week spent working from home is 3.48 in Ireland, remaining higher than the global average of 2.86.

Retail

Intent to spend online remains constant among consumers in Ireland, with slight fluctuations in clothing and footwear (down 2% to 39%), electronics (down 3% to 38%), and restaurants (down 1% to 34%). Millennials, followed closely by those concerned about safety, are driving this online trend.

There was 4% drop in those reporting concern around rising prices of everyday items (now 74% compared to a global average of 69%), with small changes in perceived prices of restaurant and grocery items this month compared to last month (up 1%).

Travel & hospitality 

There are decreases across the board in consumer plans to travel for leisure in the next three months, with most notable drops including: hotels down 6% to 39% (decreased for the third wave in a row) and international flights, down 4% to 24%. This survey was taken as the threat of Omicron significantly impacted across Irish society at the end of last month, so given its peak has apparently now passed, these markers may improve again in the coming month.

Transport

More than one in five of those surveyed in Ireland plan to buy a vehicle in the next six months, up 1% to 22% - the first such increase in the last three waves of research. Of those purchasing, 40% plan to buy a new vehicle (up 2%), the second such increase in a row.

Of those planning to replace cars, the most significant reasons included: high maintenance costs (up 7% to 22%), change in driving needs (up 2% to 15%) and a desire to switch to an electric was down two percentage points, to 7% of all consumers surveyed. New vehicle features were the most attractive element of upgrading, with 15% citing these as the main reason to change their car.

25/01/2022