Consumer Mood Monitor – October 2023
2023.11.21Consumer confidence remains challenged heading into Q4 2023, with a majority still expecting the economic situation to worsen further – the rising cost of living continues to be a key influencing factor on the general consumer mood, but economic forecasts of slower growth in Ireland, Europe and the US for next year are probably having an impact too
Following three consecutive quarters of a gradual improvement in the consumer mood, this trend has stalled and slipped back marginally. Just over half (56%) of consumers believe the economy will get worse in the next six months, up 4pts from the last wave in Jul-23. Meanwhile, 29% (-1pt v Jul-23) expect the economy to stay the same, which for many people is not necessarily a good thing, and just 15% (-3pt v Jul-23) expect it to improve. While the consumer mood is considerably better than what it was twelve months ago, it still remains quite depressed.
There are a number of factors impacting on the consumer mood, but at top of the list is the cost of living, with nearly four-in-five (79%) still expecting it to worsen in the coming six months, despite the deceleration in inflation since the beginning of this year. Another factor is the significant rise in interest rates over the past 18 months and the impact this has had on prospective home buyers, existing homeowners with mortgages and the general cost of borrowing. But other factors at are no doubt influencing consumers, with many forecasts for the Irish economy (e.g. ESRI, European Commission) being revised downwards as slower growth is expected both here and in the rest of Europe next year.
Half (50%) of all consumers are classified as either “challenged” or “desperate” (i.e. worse off than two years ago and either struggling to make ends meet or are neither comfortable nor struggling). These two groups together are also the least optimistic about the outlook for the economy, with more than two-thirds (69%) expecting things to get worse in the coming six months.
There are also stark differences in the demographic composition of those that are classified as either challenged or desperate, highlighting the wide disparity in experience of the impact of the cost of living crisis over the last two years.
Despite the prevailing negativity about the economic outlook, most do not believe this will impact on the jobs market. However, a majority still believe their discretionary disposable income will decline in the coming months (despite the changes announced in the recent budget), reflecting slower growth in wages relative to the rate of inflation. Added to this, most consumers aren’t expecting any improvement in household energy bills, despite the recent cuts in residential energy prices. It is therefore not all that surprising to still see consumers continuing to be cautious about spending on things like entertainment, consumer goods, and holidays.
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