Bank of Ireland's Savings and Investment Index dropped to a level of 91 in May - its lowest level since pre-pandemic times - as inflation and the war in Ukraine become a cause of concern for consumers.

Bank of Ireland said that consumers cited the war in Ukraine (32%) and inflation (22%) as their biggest worries.

Consistent with international surveys, Covid dropped from the list of top concerns, cited by just one in 20 as their biggest concern and below cost of housing (13%), climate change (11%) and global recession (11%).

The survey also revealed a significant drop in consumers who are saving regularly, down to 40% in May from 47% in February.

Bank of Ireland said this suggests that consumers are possibly dealing with inflation by dipping into their savings and also recognise that with interest rates at near zero, savings may lose real value.

During the pandemic, the Savings Index rose to reach a high of 108 in March 2021.

Bank of Ireland said that by the end of last year, attitudes to saving looked to be normalising but this has given way to a much greater focus on the cost of living and the index has now dropped to 91, its lowest level since pre-pandemic times.

Meanwhile, 38% of consumers now think it is a good/very good time to save, which is back to the level seen in February 2020 before Covid drove up savings.

Today's index also pointed to significant differences in concerns between generations with inflation and cost of living worries most significant among the core working age population (ages 30-59), 27% of whom cite it as their biggest worry. This drops to 21% amongst 16-29 year olds.

In contrast, 15% of those aged more than 60 cited inflation/cost of living as their main worry, with 46% seeing the war in Ukraine as their main concern. Over one in four of under 30s are most worried about the cost of housing and rent.

Kevin Quinn, Chief Investment Strategist at Bank of Ireland, said the significant increase in inflation in the past quarter has led a lot of consumers to re-think their savings habits.

"The results of our May survey suggest that consumers are both deeply concerned by the tragic events in Ukraine but also very focused on the cost of living challenges now a reality for so many families in Ireland," Mr Quinn said.

"The survey results suggest that many are dealing with inflation by dipping into the savings built up during the pandemic and also recognising that, with interest rates still near/at zero, savings are losing real purchasing power in this environment," he added.

Meanwhile, investor confidence has also dropped as markets fell back in May.

The Investment Index fell to 90 this quarter from its peak of 101 in September 2021 and down from 95 in February this year.

Bank of Ireland said the number of people who believe it to be a good/very good time to invest - 27% for May 2022 compared to a high of 36% in June 2021.

There was also an increase in those who believe it a bad/very bad time to invest - 40% compared to a low of 27% in June 2019.

When asked to look forward six months, these same consumers are somewhat more optimistic with just 32% believing it will remain a bad/very bad time to invest and 29% believing it will be a good/very good time to invest.

Despite this, 53% believe they are not investing enough, which is only 2% lower than February 2022 and higher than most scores since 2019.

Kevin Quinn said the investment market has been very challenging so far in 2022 with both equity and bond markets facing losses as the market adjusts to slower economic growth prospects, conflict in Ukraine and the response of central banks to inflation.

"That Irish investors view the environment as more difficult is of little surprise given the host of reasons for continued volatility in the months ahead. What is surprising is that they continue to recognise that they aren't investing enough, possibly an acknowledgement that the only way to overcome both inflation and super low interest rates is to continue to invest for the longer term, and for some, that may also mean that a drop in market values presents more opportunities," he added.