In a recent survey, the Credit Union Consumer Sentiment found that more than a third of Irish consumers are struggling to cope with the impact of inflation. Grocery price inflations have also hit a new record high of 16.4% this year. However, the Central Bank forecasts inflation to drop this year. Here’s more of what to expect in the coming year.
35% of consumers struggling to cope with inflation – study
The latest Credit Union Consumer Sentiment Survey found that 35% of consumers are struggling to cope with the impact of inflation on their household finances. Over half of respondents said inflation has caused a worsening in their financial circumstances, but they are managing to cope.
The most common expectation from Irish consumers is that the cost-of-living pressures will worsen for their own households. Cork University Business School Agri Economics professor Thea Hennessy said food price rises are a global issue, as it takes longer for food price decreases to work through the supply chain.
Grocery price inflation hits new record high of 16.4%
Kantar’s figures show that shoppers spent an additional €113.56 per buyer in the 12 weeks to February 19, compared to the same time last year. This comes as grocery price inflation hit a new record high of 16.4%, leading to the Irish grocery market becoming more competitive with shoppers looking for the best deals among the retailers. While the average price per pack soared 13.4% in February, Kantar said that consumers are coping with the increased cost of living by shopping little and often.
Volume per trip was down 10.9%, while frequency was up 7%. Meanwhile, online sales remained strong over the last 12 weeks, up 5.2% year-on-year with shoppers spending an additional €8m online. Shoppers have also been navigating shortages in the fruit and vegetable aisles over recent weeks. For Valentine’s Day, shoppers spent an additional €1.2m on wine, €1.5m on chilled desserts and €3.8m on chilled ready meals. For Shrove Tuesday, shoppers spent an additional €326,000 on gifting chocolate.
Dunnes holds the highest share amongst all retailers, with Tesco in second place – its highest level since January 2020. SuperValu has 20.8% of the market and growth of 2.9%. Lidl has 12.6% share and growth of 10.9% year on year, while Aldi has 11.7% and growth of 8.8% year on year. A strong boost in new shoppers and more frequent trips has contributed an additional €31.2m to overall performance, Kantar said.
Central Bank forecasts inflation to fall to 5% this year
The Central Bank forecasts inflation to fall to 5% this year and household incomes to improve. It also expects the domestic economy to grow by 3%, with food inflation overtaking energy inflation as the biggest source of price increases. The bank also forecasts that the surplus in the public finances will almost double next year due to windfalls of corporation tax.
It also warns that Ireland’s increasing dependence on Britain as a source of energy imports is a risk, with almost two thirds of its energy needs coming from there last year. It concludes that Irish output will be 2% lower by 2029, while Modified Domestic Demand will grow by 3.1% this year and 2.9% in 2024. It also expects the GDP to grow by 5.6% this year and 4.8% next while unemployment will remain at 4.4% this year and next.
The Director of Economics and Statistics with the Central Bank said that headline inflation has “likely peaked” and has started to come down, while corporation tax will continue to grow, but the lack of available housing still continues to be an impediment to economic activity.Inflation continues to be a rising concern in the coming years. Stay up-to-date on the latest developments and make sure your business and finances are prepared for any sudden changes. Get professional advice, contact Mark Kennedy & Co.
