Savings and investing attitudes improve as drop in inflation impacts

• Savings & Investment Index continues to recover – results now back to pre-pandemic levels
• Consumers perceive current environment as a “good time to save now”
• Investor sentiment is also more buoyant – Six in ten consumers say they need to invest more

The Bank of Ireland Savings and Investment Index continues to recover, with Q4 2024 results back to pre-pandemic levels, driven by more consumers feeling it is a good time to save, and an improvement in attitudes to investing.

The Index also showed some significant changes in what is concerning Irish households at the end of 2024. Inflation which was so dominant in the survey results in the past three years has reached its lowest level, with just 18% citing it has their primary concern (compared to a peak of 33% in February 2023). Housing and the cost of rent concerns fell slightly to 16% from its peak of 19% in May 2023. Conflicts such as the Middle East and Ukraine are prominent, cited by 28% of people as their main concern while worries about global recession increased to 12%, doubling from 6% in July this year.

• Overall Savings and Investment Index rose to 94 in Q4, up from 83 in July and a record low of 76 in August 2023
• Savings Index up significantly to 95 in November, from 80 in July and a record low of 76 in August 2023
• Investment Index rose to 93 in November, up from 85 in July and a record low of 76 in August 2023

Savings – Attitude to savings has changed dramatically this quarter, with a four in ten people seeing “now 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. 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% p.a. in October ’22). By November this year, with the inflation rate dropping (it’s now down to 0.7% p.a.), less than one in five people cited inflation as their biggest concern.

Investing – Attitudes to investing also changed this quarter, with three in ten people seeing 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 incidence of individuals investing has also increased and 61% now say they need to invest more than they currently do.

Commenting on the Q4 Savings and Investment Index, Kevin Quinn, Chief investment Strategist, Bank of Ireland said: “There is little doubt that the cost of living remains a prominent concern for a great deal of families in Ireland and the overall increase in prices over those 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.

“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% since the start of last year. Against that backdrop we are seeing increased confidence amongst investors, with as many as six in ten 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.”