Despite inflation dropping from a high of 9.2% in October last year to 6.6% in May this year, the latest Bank of Ireland Savings and Investment Index shows that inflation remains the biggest concern for Irish consumers.
Concerns over the cost of housing and rent also remain high, the latest research for the second quarter of 2023 also shows.
Bank of Ireland said the cumulative impact of inflation will continue to be an ongoing concern for households even if the headline rate looks likely to continue to drop.
The latest survey shows that household attitudes to the savings environment are changing rapidly this year.
The overall savings environment index dropped to a new low of 69, while people's attitude to whether it will be a good time to save in the coming six months also fell to 73.
Recent CSO figures showed that the amount being saved as a percentage of income here fell sharply in the first quarter of 2023, with households now saving 14% of their income compared to 24% at end of 2022.
However, it is still higher than pre-pandemic levels in 2019 of 12.2% and Bank of Ireland said the trend is clearly one of "normalisation". This has happened as household consumption went up, while real income has dropped.
On the investing environment, Bank of Ireland said that attitudes have remained steady with no overall change to the investment index for May.
This comes on the back of very solid gains in both the equity and bond markets in the first half of 2023.
As of mid-June, global equity markets were up over 9% while global bond markets were up almost 2%. Despite these very solid gains, there remains an air of caution amongst households when it comes to investing.
Kevin Quinn, Chief Investment Strategist at Bank of Ireland, said that 2023 has seen a considerable shift in attitudes to saving.
"During the pandemic people were saving almost a quarter of their income, and that pattern continued throughout 2022. But this year, as the cost of living has become such a challenge for many households, savings levels have begun to revert to pre-pandemic norms," he noted.
He also said that while investment returns have been strong so far this year, markets have had a lot of news to digest, so it is not surprising that there has been something of a trade-off in investors' minds.
"The past few months has seen another element enter the equation as the large technology-oriented companies, particularly those who are likely to lead in artificial intelligence have made massive gains. This trend will undoubtedly be one of the defining features of the investment market this year," Mr Quinn said.
"The fact that several major equity markets are now in a bull market is likely to see increased confidence amongst many would-be investors as they look to deploy their money in either regular investment or pension funds," he added.
