Survey: NI consumer confidence already on slide ahead of latest energy price shocks
CONSUMER confidence in Northern Ireland was on the decline ahead of the latest spike in energy prices, new analysis from Danske Bank suggests.
The lender said spending confidence slipped between the second and third quarters of this year.
The survey was carried out in September, before the roll out of the £100 Spend Local scheme, designed to boost spending with the north's bricks and motor retailers.
Around one-in-four said their finances had already deteriorated over the past year, with a similar number expecting to be in a worse financial position over the next year.
One-in-three said they intend spending less on expensive goods over the next year.
It comes as the Office for National Statistics in London said the rate of Consumer Prices Index (CPI) inflation rose sharply from 3.1 per cent in September to 4.2 per cent last month - the highest level since December 2011 and a bigger-than-expected jump.
Most economists are forecasting that interest rates will rise to 0.25 per cent in December from their all-time low of 0.1 per cent as pressure mounts on the Bank of England to rein in inflation.
A mounting cost of living crisis has seen prices rise across the board - for energy, fuel, food, cars, furniture and eating out.
Northern Ireland’s Utility Regulator warned last month that soaring wholesale gas costs could see domestic gas bills soar 50 per cent over the winter, with electricity bills rising by around 20 per cent.
The Bank of England is forecasting CPI will reach 4.5 per cent in November and hit around five per cent next April, the highest level since 2011.
But new analysis from the National Institute of Economic and Social Research (NIESR) in London suggests the rate of inflation is lower in Northern Ireland.
The think tank, which excludes five per cent of the highest and lowest price changes in its monthly tracker, said underlying inflation in the UK rose 2.1 per cent in October.
Using that approach, it said at 1.5 per cent, Northern Ireland recorded the lowest inflation rate of any UK region.
Danske Bank’s chief economist Conor Lambe said a number of headwinds have emerged for the north’s post-lockdown recovery, including inflationary pressures, supply chain disruption, labour shortages, continued high numbers of positive Covid-19 cases and political uncertainty related to the post-Brexit trading arrangements.
“Some of these factors were identified by local people as contributing to the fall in consumer confidence in the third quarter of the year and it will be important for businesses and policymakers to monitor them closely in the months ahead as the economic recovery hopefully continues,” he said.