May 2022 - Consumer Mindset
A Moment of Adjustment
The combined shock of a war in Europe, rising inflation with an on-going pandemic resulted in declining consumer confidence since the start of the year, underpinned by a high level of emotions experience by the public, including anxiety, stress and fear.
However, in May, it appears that people maybe adjusting again to another period of the unknown, and re-designing their expectations about the short-term and long-term future. While anxiety has declined, and happiness has risen as a result of less pandemic breaking news, people are now figuring out their plan for managing rising costs while also engaging in a more diverse news cycle.
The Ups and Downs of News
For two years, the Core Cultural Index has been dominated by the pandemic, but this month only one story related to COVID-19 appeared, and was quietly sitting in the shadows of others. Less than half the population were aware of a new variant, and as a result, only 20% of people say they are concerned about COVID-19, down from 41% this time last year.
The war in Ukraine is now a key story amongst the Irish public, but so too are local stories – both tragic and joyous. As a result of this more diverse news cycle, the public are more in control of what matters to them, while managing rising costs is a key concern.
Consumer Intent versus Reality
In March, Core began to ask people how they were responding to rising inflation, and in May when inflation is at 7%, we now have a good sense of what tactics people are employing.
Central to this, is the intent of consumers, compared to their actual behaviour. For three months, consumers have stated that they intend to drive less (to save fuel), spend less out socialising (maximising disposable income) and shop for less expensive items in stores.
However, behavioural data suggests that car owners continue to drive as much (despite annual fuel inflation of 31.6%), and people have returned to retail and hospitality spaces, as much as they were pre-pandemic. While we have yet to see spending patterns across multiple categories for this period, many are not cutting back as much as they have said they intend to.
Perceptions of Value Matter
That said, value will matter in 2022. Choices that people make will be a reflection on what they derive in benefit from their purchases, compared to what they can save. Promotion of discount may seem like an explicit way to promote value to a more cost conscious consumer, but for many, they still want to enjoy products and experiences, as long as the provider is offering a ‘fair’ price.
It would seem that in May, consumer confidence will not decline further in to the summer, but consumers will be considering how and why they are spending their income. Good health, socialising, and moments of joy will all be key benefits which the public now demand.
