Household spending pace accelerates in January
Bank of Ireland said its customers increased their debit and credit card spending in January, with the pace of household spending growing by 6.1%, up from 4.5% in December.
The bank’s consumer spending trends research shows a surge in summer holiday planning, with travel agencies reporting a 50% increase in sales from December, while airline spending rose by 90%.
Although year-on-year growth in these categories was modest, spending on hotels and resorts also increased by 4.9%, it added.
Meanwhile, spending on sports clubs saw a substantial 23% year-on-year rise, which the bank said reflected “New Year, New You” resolutions.
But the January sales season’s impact on retail was less pronounced, with clothing sales down 5% year-on-year, although electrical goods saw a 6.4% increase. Bank of Ireland noted that November and December are now the most important months for sales of both these items.
Today’s figures from Bank of Ireland also shows that ATM withdrawals decreased in January by 2% year-on-year and now account for just 12% of total card spending, down from nearly one-third before Covid.
“January’s credit/debit card data showing nominal spending growth of 6.1% is an encouraging sign, showing households’ incomes and expenditure are now growing faster than prices. Notably, cash withdrawals now account for just €1 in every €10 spent by Irish households, well down from one-third just a couple of years ago,” said Conall Mac Coille, Chief Economist at Bank of Ireland.
Looking ahead, Bank of Ireland forecasts a 3% real growth in consumer spending for 2025.
“Several indicators support this optimistic outlook, including employment growth at 3.7%, a low unemployment rate of 4%, and average earnings growth of 5%, which is above the CPI inflation rate of 1.4%,” the economist said.
“Budget 2025 tax cuts, worth 2% of disposable incomes at the average wage, are also expected to bolster consumer spending”, he added.
Article Source – Household spending pace accelerates in January – Bank of Ireland – RTE
