Families rein in spending for fear of recession – The Irish Times

Almost two in three families are hoarding money because they are uncertain about the future, according to a new report from the Bank of Ireland.

The Bank of Ireland’s Economic Pulse, a monthly indicator of consumer and business sentiment, hit a 17-month low of 70.2 in July as both groups continued to feel the pinch of the inflation.

The study found that 64% of households were holding back on spending, while just one in six considered it a good time to make big purchases like furniture or electrical appliances.

According to the survey, a “dominant backdrop of high inflation and uncertainty” has left families gloomier about their financial outlook than in previous months.

Dr Loretta O’Sullivan, chief economist at the Bank of Ireland group, said the pulse of consumers had fallen below its Covid-19 low, while all businesses were less optimistic about the future.

However, she maintained that there were bright notes in July’s pulse. The number of businesses struggling with shortages and costs seems to have stabilized during the month.

“On the labor front, wage increases are in prospect as companies seek to retain and attract staff, and workers find it easier to get or change jobs, but with a view to competitiveness. and reflecting greater economic uncertainty, wage expectations remain relatively contained,” says Dr O’Sullivan.

Homeowners were also less optimistic about property values, although three in five still believe they will rise in the coming year, down from around 80% in June.

The European Central Bank’s decision to raise interest rates by 0.5%, which should increase mortgage repayments, is partly responsible, according to the study.

Companies in industry, services, retail and construction all lowered their short-term expectations. Retailers fear a loss of consumer confidence, while other industries worry about the general economic outlook.

Sentiment was down in all parts of the Republic this month, according to the survey.

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