Savings and investment levels are back to pre-pandemic levels, according to Bank of Ireland, which has also reported a fall in public concern around the cost of living.
Inflation, which was “so dominant” among consumer concerns over the past three years, reached its “lowest level”, in the fourth quarter of 2024, as 18 per cent cited it as their main worry, down from a peak of 33 per cent in February 2023.
Housing and cost of rent concerns fell to 16 per cent from a peak of 19 per cent in May 2023.
The conflicts in the Middle East and Ukraine were prominent in people’s minds, cited by 28 per cent as their main concern when it came to money, while worries about global recession increased to 12 per cent, doubling from 6 per cent in July.
The overall savings and investment index rose to 94 in the quarter, up from 83 in July and a record low of 76 in August 2023.
Bank of Ireland said public attitudes to savings had “changed dramatically” in the quarter, with four in 10 people viewing the period as “a good time to save” compared to less than one in four in August 2023.
“While no doubt partly driven by higher deposit rates being available, a more significant element is the influence of inflation,” said the bank.
What’s in store for 2025?
“As the surge in inflation began to impact significantly on household budgets in early 2023, one in three people cited it as their biggest concern. The inflation rate peaked at 9.3 per cent per annum in October 2022.
“By November this year, with the inflation rate dropping – now down to 0.7 per cent per annum – less than one in five people cited inflation as their biggest concern.”
The group said attitudes to investing also changed during the quarter, with three in 10 people judging “now as a good time to invest”, compared to just over one in five in August 2023. “We have to go back to September 2021 to see a higher rating,” the bank said.
The incidence of individuals investing also increased, and 61 per cent told the bank they now need to invest “more than they currently do”.
Bank of Ireland chief investment strategist Kevin Quinn said there was “little doubt” the cost of living remains a “prominent concern for a great deal of families” while the overall increase in prices over recent years remains “an enormous problem for many”.
“However, this is the first time we’ve seen the fall in the inflation rate beginning to influence how people are thinking about their savings and it was a considerable change in our most recent survey results,” he said.
“Attitudes to investing are also changing. This is driven by the dual impact of falling inflation and the experience many have had of an exceptional period of strong returns, with the global equity market generating almost 50 per cent since the start of last year.
“Against that backdrop we are seeing increased confidence amongst investors, with as many as six in 10 saying they need to invest more than they currently do.
“While inflation in Ireland has been falling since late 2022, it took until August 2023 before we saw a turning point for all the sentiment and attitudes tracked by our savings and investments index, and they continue to improve.”
- Sign up for the Business Today newsletter and get the latest business news and commentary in your inbox every weekday morning
- Opt in to Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
