Economic Life and COVID-19 in Ireland, 2020-2021

Household Expenditure

As well as changes to working and earning patterns, the pandemic also brought differences to the spending habits of Irish consumers. Household expenditure on goods and services fell by €10bn in 2020, a drop of 10%. Spending on Catering services fell by €4.9bn (down by 35.4%) while Accommodation services fell by €1.6bn (-65.4%). There were also large decreases in Transport services (-€1.1bn or -30.1%), Purchase of vehicles (-€821million or -17.9%) and Package holidays (-€697million or -77.2%) See Table 3.1.

While many categories of household expenditure showed decreases in 2020 compared with 2019, there were rises in a few areas. Spending on Alcoholic beverages (purchased for home consumption) rose by €488m (up 22.0%) to reach €2.7bn, while Telephone and telefax services increased by €448m (up by 21.9%) to €2.5bn.

Looking at household spending but adopting more aggregated categories (on a 2-digit COICOP level), Communications accounted for the largest percentage increase in household spending in 2020, experiencing additional expenditure of 18.5% (€0.4 billion). Increases in spending by households were also recorded on Alcoholic beverages, tobacco and narcotics (5.1%), Food and non-alcoholic beverages (2.2%), and Housing, water, electricity, gas and other fuels (0.8%). See Figure 3.1 and Figure 3.2.

The fall in household spending on Catering services and Accommodation services coincided with large numbers of employees in the Accommodation and food service activities sector being supported by Government COVID-19 income supports, and a decline in the number of actual hours worked per week by this sector throughout 2020. See How we worked.

Personal consumption of goods and services

Personal consumption of goods and services (in constant market prices) is the sum of household expenditure on goods and services, expenditure by non-profit institutions serving households (NPISH) on goods and services, and General Government expenditure on goods and services provided to households. See Background Notes for more information.

The value of personal consumption of goods and services increased in each quarter of 2019 compared with 2018 and stood at €111,055m in 2019. However, it was 5.8% lower in Q1 2020 compared with Q1 2019 and was 19.5% lower in Q2 2020 than one year earlier. This pattern continued throughout 2020. The value of personal consumption of goods and services in Q3 was 7.7% lower than the same quarter in 2019, while it was 8.8% lower in Q4 than one year earlier. See Table 3.2.

As some public health restrictions were reintroduced in the first quarter of 2021, personal consumption of goods and services fell 11.8% compared with one year earlier. This pattern reversed in Q2 2021, however, when personal consumption was 19.3% higher than one year earlier and stood at €25,828m, but this was still below the value of €26,905m in the same quarter pre-pandemic (2019).

Retail Sales Index

The Seasonally Adjusted Retail Sales Volume and Value Indices are produced by the CSO's Business Statistics - Data Collection and Services Outputs division on a monthly basis. For the purpose of this report, monthly indices have been converted into quarterly indices by taking a simple average of the relevant three months. The Seasonally Adjusted Retail Sales Volume and Value Indices provide great insight into the changes in consumer consumption patterns during the COVID-19 pandemic.

The volume of retail sales fell slightly by 1.1% in Q1 2020 compared with Q1 2019. However, by the second quarter of 2020, the volume of retail sales fell sharply by 22.1% compared with the same period in 2019, but then rose by 9.5% in Q3 and 3.3% in Q4 compared with one year earlier.

The first quarter of 2021 saw another drop in the volume of retail sales of -0.7% compared with the same quarter of 2020. However, there was a strong recovery in the second quarter, when the volume of retail sales was 39.5% higher than one year earlier, and 8.7% above the same period in 2019 (i.e. pre-pandemic).

The change in sales volumes was not uniform across all retail sectors - some sectors experienced growth, while others experienced considerable falls in sales volumes. As shown in Table 3.1, household expenditure on Restaurants and hotels fell by just under 40% during 2020. This decline in spending by households is reflected in the severe fall in sales volumes of Bars throughout 2020 as they had to close intermittently due to the pandemic. As the pandemic continued and public health restrictions were reintroduced in Q1 2021, the volume of sales recorded by Bars was down 89.0% on the same period of 2020. Although the volume of Bar sales increased in Q2 2021 compared with Q2 2020, sales volumes were still less than a quarter (23.0%) of the same period pre-pandemic (2019).

There were annual declines in the volume of sales in all retail sectors in Q2 2020, with the exception of increases of 16.5% in Non-Specialised Stores (incl.Supermarkets) and 16.4% in Food, Beverages & Tobacco. Strong growth in sales continued for the rest of 2020 and into 2021 for both these sectors. Sales volumes were 16.1% higher for Non-Specialised Stores (incl. Supermarkets) and 24.8% higher for Food, Beverages & Tobacco in Q2 2021 compared with the same quarter pre-pandemic (2019).

Other sectors also experienced growth in retail sales volumes in Q2 2021 compared to the same quarter in 2019, such as Hardware, paints and glass (up 24.7%), Motor Trades (up 18.9%) and Electrical goods (up 16.1%). See Table 3.3.

Online Turnover

The COVID-19 pandemic and accompanying public health restrictions led to changes in the way consumers purchased goods. Beginning in November 2018, the CSO's Business Statistics - Data Collection and Services Outputs division, through the use of the Monthly Retail Sales Inquiry (a monthly survey), began collecting data on the value of retail turnover generated by online sales for Irish registered companies. These results show that as the pandemic progressed and physical shops and retail premises closed, the proportion of turnover generated by online sales increased. Online sales accounted for 3.3% of all retail business turnover in 2019, but this rose to 7.0% in 2020.

Note: an increase in the proportion of turnover generated by online sales is not always indicative of greater spending online. See Background Notes for more information.

In each month of 2020, the proportion of retail business turnover generated by online sales was higher than the corresponding month in 2019. The largest percentage point rise was 12.3 in April 2020, when 15.3% of turnover was generated by online sales compared with 3.0% in April 2019. There were also large percentage point increases of 10.3 in May and 8.4 in November.

For the first nine months of 2021, online sales made up 7.6% of all retail sale turnover, but dropped to 4.9% for the months of May to September. However, the proportion of turnover generated by online sales was still higher in all months in 2021 compared with the corresponding month pre-pandemic (2019), with the largest difference of 8.8 percentage points in February 2021.

Clothing, footwear & textiles, Electrical goods and Department Stores had some of the largest percentage point rises during the pandemic compared with 2019 in the proportion of turnover which was generated by online sales. See Table 3.6.

Even though many physical retail premises were fully open by September 2021, (as restrictions eased), turnover generated by online sales were 1.7 percentage points above the same month in 2019. See Table 3.5 and Table 3.6.

New Cars Licensed

As travel restrictions were also a feature of the pandemic, it is of interest to assess the impact which the pandemic had on the sale of private cars, both used (imported and licensed here for the first time), and new.

The number of cars (both imported and brand new) newly licensed for the first time fell by more than a quarter (26.7%) between 2019 and 2020, from 222,200 in 2019, to 162,850 in 2020. The number of brand new private cars licensed for the first time fell by 25.6% in 2020, from 113,305 in 2019 to 84,309 in 2020, while the number of newly licensed used (imported) private cars fell by 27.9%, from 108,895 in 2019 to 78,541, resulting in a total decline of 59,350 newly licensed private cars. See Table 3.7.

The start of the pandemic had an immediate effect on the motor trade. New private cars licensed for the first time in Q2 2020 fell by 81.3% compared with Q2 2019, while the number of newly licensed used (imported) cars decreased by 75.8% over the same timeframe.

The number of private cars (imported and brand new) licensed for the first time continued to fall in 2021, declining by 5.9% from 64,519 in Q1 2020, to 60,687 in Q1 2021. However, as some public health restrictions were removed during Q2, the number of newly licensed private cars began to rebound and increased by 247.7%, from 11,246 in Q2 2020, to 39,098 in Q2 2021. This, however, remained below the number of private cars newly licensed in Q2 pre-pandemic (2019) by 25.6%. See Table 3.7.

Residential Property Price Index

As work and earning patterns changed in the pandemic, (see How we worked), and overall household spending on goods and services in Ireland fell by €10bn, it is interesting to examine if there was any pandemic impact on the prices of residential dwellings.

The Residential Property Price Index (RPPI) increased on an annual basis in each quarter of 2019. This trend continued into 2020, (with the exception of Q3), but at a slower rate. Compared with the same quarters of 2019, there were rises of 1.0% in residential property prices in Q1 and 0.3% in Q2 2020. The third quarter had a drop of 0.8% compared with one year earlier while Q4 had an increase of 0.7%. As noted later in this chapter, during the same time period, gross household saving increased from €11.9bn in 2019 to €31.5bn in 2020, a rise of 166.0% (see Table 3.13).

Growth in residential property prices increased further in 2021. Prices were higher by 3.0% in Q1 and 5.6% in Q2 2021 compared with the same quarters of 2020. See Figure 3.6 and Table 3.8.

Prices of new residential dwellings increased annually in each quarter of 2020 while existing dwellings recorded annual declines in prices in Q2 and Q3 2020 of 0.2% and 1.6% respectively. However, prices for existing dwellings rose at a faster pace than that of new dwellings in Q1 and Q2 2021, with prices increasing annually by 3.2% in Q1 and 6.7% in Q2 2021, compared to rises of 2.5% and 2.2% for new residential dwellings in the same quarters one year previous. See Table 3.8.

By Q2 2021, residential property prices for all dwellings were 5.9% higher than the same quarter pre-pandemic (2019). Prices for new residential dwellings were 4.4% more expensive in Q2 2021 than the same quarter pre-pandemic, while prices of existing dwellings were 6.4% higher.

The increase in residential property prices has not been uniform across the country. While property prices in Dublin in Q2, Q3, and Q4 2020 fell in comparison with the same quarters of 2019, prices outside Dublin for all residential properties increased throughout 2020 or remained the same in every quarter, compared with 2019.

Property prices of all residential properties continued to increase annually at a faster rate outside of Dublin in 2021, rising by 4.3% in the year to Q1 and by 6.3% in the year to Q2, compared with an increase of 1.6% in Dublin in the year to Q1 2021, and a rise of 5.0% in the year to Q2. By Q2 2021, house prices outside of Dublin were 6.9% greater than Q2 pre-pandemic (2019), while apartment prices had increased by 12.4%, in comparison with an increase of 5.6% in house prices and 3.0% in apartment prices in Dublin over the same period. See Table 3.9.

The overall trend in the volume of filings with Revenue of purchases of residential dwellings was one of decline during 2020. There was an increase of 4.8% in the first quarter, followed by declines of 36.3% in Q2 and 34.4% in Q3 compared with the same quarters in 2019. The last quarter of 2020 had a small increase of 2.0% compared with one year earlier.

While the number of residential dwelling purchases filed with Revenue in 2020 was lower than that recorded in 2019, growth has been recorded in the first half of 2021 compared to both the first six months of 2020 and 2019. There was a 21.6% increase in residential dwelling purchases registered with Revenue in the first six months of 2021 compared with 2020, and a 1.8% increase compared with the same period pre-pandemic (2019). See Table 3.10.

Consumer Price Index

Total consumption by households fell during the pandemic in 2020 compared with 2019. It is therefore interesting to examine how consumer prices behaved during the pandemic.

Consumer prices, as measured by the Consumer Price Index (CPI), were 0.3% lower in 2020 compared with 2019. Although there were price increases in the first three months compared with one year earlier, the following nine months saw average prices fall in comparison with the same months in 2019, particularly during the last few months of 2020. See Figure 3.7 and Table 3.11.

The largest percentage fall in prices in 2020 was in Communications, where prices were 7.0% lower than in 2019, followed by Clothing & footwear, where prices declined by 3.7%. Over the same period, household spending on Communications increased by 18.5%, while household expenditure on Clothing & footwear fell by 1.7%. See Table 3.1 and Table 3.12.

The highest percentage increase in prices between 2019 and 2020 was 3.0% in Education, followed by Health at 2.8%. There were also price increases of 2.4% for Alcoholic beverages and tobacco between 2019 and 2020.

The Recreation & culture and Restaurants & hotels commodity groups recorded price increases of 1.4% and 1.1% respectively in 2020. These price increases coincided with large falls in household spending on Recreation & culture and Restaurants & hotels related goods and services, and many employees in both sectors availing of government income supports. See Table 2.7, Table 3.1 and Figure 3.8.

Prices as measured by the CPI fell by 0.2% in the first quarter of 2021 compared with the same period in 2020. However, as some restrictions started to ease during Q2 2021, prices rose by 1.4% compared with Q2 2020, and by 1.1% compared with Q2 2019. See Table 3.12.

In Q2 2021, the largest annual price increase was in Housing, water, electricity, gas & other fuels where prices rose by 4.6% compared with Q2 2020. This commodity group includes energy prices and by Q2 2021, Housing, water, electricity, gas & other fuels were 2.4% more expensive than Q2 2019. See Table 3.12.

Household Savings

Throughout 2020 there were high levels of government spending on COVID-19 income supports (see Impact on macro-economics), while earnings for those who remained in employment increased in comparison to pre-pandemic (2019) (see How we worked). However, despite these income supports and higher earnings, household expenditure on goods and services in Ireland fell by €10bn, which leads to the question; where did the money go?

Gross saving of households rose by 166.0% in 2020, from €11.9bn in 2019 to €31.5bn. This compares to a rise of just €0.1bn in 2019 compared with 2018. See Table 3.13.

Gross disposable income of households increased in 2020 to €123.7bn from €114.5bn in 2019. Over this same time period, the proportion of gross disposable income which was saved also increased, from 10.4% in 2019 to 25.5% in 2020, a rise of 15.1 percentage points. See Figure 3.9.