consumer confidence Archives - Ireland's Forecourt & Convenience Retailer

Musgrave warns of ‘perfect storm’ brewing for consumers

Linda Stewart — Fri, 24 Jun 2022 09:34:15 +0000

Grocery group Musgrave says consumers could soon face a “perfect storm” of surging energy bills and accelerating inflation driving up living costs as they run out of savings built up when they stayed at home during the pandemic.

The wholesale grocery distributor and owner of two of the biggest grocery chains, SuperValu and Centra, has started to see customers shop around for value and swap branded goods for cheaper own-brand versions in the last six to eight weeks, Noel Keeley said.

“If we look to September, in my view, the perfect storm conditions are coming for the consumer,” Mr Keeley told Reuters.

“You could have a situation where Covid savings are gone, summer holidays are over and they may have a bill to pay for that. Energy bills then start to come in and they’re much more significant than they used to be, kids are going back to school and you could have an interest rates increase as well.”

Tesco Chief Executive Ken Murphy told the Consumer Goods Forum’s Global Summit that it was seeing signs in its Irish stores of the same stress its main British business is experiencing. Irish inflation accelerated to a near 40-year high of 7.8% in May, with food inflation up 4.5% year-on-year.

Musgrave is “looking at every cost in the business” to absorb as much as possible, Mr Keeley said, and this includes cutting the number of deliveries to stores and trimming some product ranges where it makes sense.

It is also making sure suppliers “take a share of the pain” when it comes to price negotiations.

Mr Keeley believes the premium end of the grocery market will hold up during the period of high inflation while Musgrave’s market leading Frank and Honest coffee brand also continues to grow with no let up in people buying coffee on the go.

However he warned that that consumer confidence is fragile.

“When there’s a lot of talk about recession and challenges in the economy, all consumers tend to pull back, even the ones that perhaps have more disposable income than others,” Keeley said.

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Consumer sentiment drops as ‘households face €2,000 hit from surging prices’

Linda Stewart — Thu, 24 Mar 2022 10:33:44 +0000

Consumer confidence is dropping at the fastest rate since the start of Covid two years ago, as households face an average hit of €2,000 to their living standards from soaring energy and food prices, a major survey has unveiled.

The findings of the KBC Bank survey confirms that living standards face an extraordinary challenge as fears grow that the Russian invasion of Ukraine will lead to inflation getting out of control.

“We estimate the economy-wide hit from higher inflation could be over €4bn, or about €2,000 per household,” said Austin Hughes, chief economist at KBC.

Most consumers say they plan to cut back spending this year, and almost half suggest they will cut by a large amount.

Mr Hughes said the latest drop in consumer confidence here was the largest since April 2020, when the first of the Covid lockdowns was introduced.

“The Irish consumer is probably punch drunk after the financial crisis, Brexit, Covid, and now war in Ukraine,” said Mr Hughes.

The sentiment survey “signalled a marked change in thinking and suggests a material downgrade of the economic and financial outlook by Irish consumers”, according to KBC.

“The March survey saw a sharp worsening of the general economic outlook and a similarly large weakening in consumers thinking on the prospects for their own household finances that likely reflects notably increased inflation fears,” according to the survey.

However, consumers are still confident about the outlook for jobs, according to the KBC survey. That chimes with most major economic surveys that project the economy will grow strongly, employment levels will rise, and unemployment will fall this year, even as inflation surges.

The ESRI this week projected that consumer price inflation will peak in early summer at 8.5% — up from 5.6% last month — before moderating. Irish inflation remains hugely elevated, at 5% in 2023, it forecast.

The think-tank said that although the Ukraine war has ratcheted up the risks, the economy will nonetheless expand rapidly this year and in 2023, as long as there are no new major shocks to the supply of energy to global markets.

The economy will expand 6.2% this year and by 4.3% in 2023, in GDP terms, the ESRI has projected. It also said the public finances had emerged from the Covid crisis in good shape.

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Consumer confidence falls amid grim economic outlook

Linda Stewart — Thu, 24 Feb 2022 10:32:38 +0000

The latest KBC Bank consumer sentiment index show a decline in consumer confidence amid ongoing nervousness about the uncertain economic climate.

The index fell to a reading of 77, down from 81.9 in January, reversing most of that month’s improvement as Covid restrictions eased, although there was a sign of increased optimism about job prospects.

“While wind and rain lashed Ireland in February, an increasingly stormy economic and financial outlook prompted renewed weakness in consumer sentiment,” said KBC Bank Ireland chief economist Austin Hughes.

Mr Hughes said the “relatively contained” drop in sentiment was because Irish consumers have been largely “defensive” in their thinking for a considerable period.

The modest extent of the monthly fall was also “due to the fact that although living cost strains have intensified of late, they have been a source of concern for consumers for some time”, he added.

While developments in Ukraine pose downside risks, the extent and duration of the difficulties they may cause for Irish consumers “remains very unclear”.

Increases in housing costs and consumer prices likely weighed on consumers’ minds during the month, with all elements of the survey relating to household finances showing “consistent downgrading” compared to January.

“At the margin, media reports of an emerging consumer boom likely heighten a sense of exclusion from an economic upswing for many consumers that further depresses their assessment of their own financial circumstances,” Mr Hughes said.

However, the jobs element of the survey, which is based on a nationally representative sample of 1,000 adults, saw a “clear and material” improvement in February that Mr Hughes said likely reflected anecdotal as well as statistical reports pointing to strong positive momentum in the Irish jobs market.

More consumers expect unemployment to fall than rise in the coming year, contrasting unusually with their expectations for the economic outlook in general, with twice as many consumers expecting the Irish economy to weaken in the next 12 months as expect it to strengthen.

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