Half of consumers to rein in big ticket item spending, says Danske Bank report
CONSUMER confidence in Northern Ireland has taken a massive turn for the worse, with all vital signs weakening, according to a Danske Bank index.
Coming against a backdrop of cheerless domestic news, it shows that almost 50 per cent of people intend to spend less on expensive items this quarter as belts are tightened.
Spiralling prices continued to weigh heavily on households over the last quarter, with a consumer confidence reading of 103, which is down from 117 in quarter one and in stark contrast to the 149 reading posted in the same period of 2021.
Respondents to the June survey reported feeling less confident about their current finances, future finances, job security and expected spending on expensive items.
The also report showed 55 per cent of people expect their financial position to worsen over the next year, while just 60 per cent of people expect their job security to remain unchanged. Meanwhile nine per cent expected their job security to worsen.
When asked what factor had the largest negative impact on their confidence levels, 47 per cent of respondents pointed to the impact of higher prices on their household finances, 13 per cent said that global risks, which includes the war in Ukraine, were contributing factors and for 12 per cent of respondents the post-Brexit trading arrangements in Northern Ireland had an adverse impact on sentiment.
Danske Bank chief economist Conor Lambe said: “When we conducted our survey in June, the rate of inflation in the UK hit a multi-decade high of 9.4 per cent as a combination of factors including higher fuel and energy prices and global supply chain disruption continued to put upward pressure on prices.
“This high inflation was the largest driver of the fall in consumer confidence and, looking forward, it's likely that consumer price inflation will rise even higher with price pressures further up the supply chain also at elevated levels.
“Given the higher prices currently being experienced and the expectation that inflation could move even higher, it's likely that consumer spending in Northern Ireland and the wider UK will become increasingly squeezed. As such, the performance of the overall economy is expected to soften as we move through the remainder of 2022 and into 2023.”
One positive element to emerge from the index was that 40 per cent of consumers reported feeling more confident to society's adjustment to living with Covid-19.