The Households Saving Rate was 11.99% in Quarter 2 (Q2) 2023 (April to June), up from 10.63% recorded in the first quarter of the year.
Both income and consumption rose in the period, with increased wages leading to more saving in the period.
The Consumer Price Index (CPI) was 1.7% higher at the end of June (the end of the second quarter) than at the end of March 2023 (the end of the first quarter), and it rose 6.1% in the 12 months since June 2022. The biggest contributions to the rise in the Index over the 3 months came from Restaurants & Hotels and Recreation & Culture. As drivers of inflation, these services overtook Housing, Water, Electricity, Gas & Other Fuels which had been the biggest factor in other recent quarters.
As well as higher prices, there were also slightly higher volumes of consumption (0.9%) in the quarter. The Retail Sales Index volume was up, showing greater consumption in bars and supermarkets, and in the Services Index, the Accommodation & Food Service sector grew. Statistics on Vehicle Licensing showed more private cars were bought, both new and second hand, even after adjusting for seasonal factors.
Total Disposable Income (TDI) of households rose 1.2% in Q2 of 2023. This is after adjustment for inflation and seasonal factors. While 1.2% is a relatively small increase, incomes are out-pacing significant price rises, and the growth in the quarter comes after several quarters of smaller rises or even slight falls, as shown in Figure 2, below.
Compensation of Employees at current prices seasonally adjusted rose 3% compared to Q1 2023. Figure 3 illustrates the changes by economic sector in the quarter after adjusting for seasonal factors. The largest increase quarter-on-quarter was in Public Administration, Education & Health, which is the largest sector. There was also a significant rise in Information & Communication. Compensation of employees was higher in most other sectors owing to a combination of higher average weekly pay (seasonally adjusted) and more people in work.
As well as wages, TDI also includes other income such as self-employed earnings, interest and dividends received and social benefits (such as Child Benefit), but is after deduction of income taxes, social contributions (such as PRSI) and interest paid. More detail will be published in the Institutional Sector Accounts next month.
| sector | Change (Seasonally Adjusted) since Q1-2023 €m |
|---|---|
| Agriculture, Forestry and Fishing | -0.352214615259584 |
| Industry (excl. Construction) | 64.5809491434902 |
| Construction | 50.7879506134759 |
| Distribution, Transport, Hotels and Restaurants | 153.688436932142 |
| Information and Communication | 161.603276581279 |
| Financial and Insurance Activities | -14.7924949841613 |
| Real Estate Activities | 11.4180256513166 |
| Professional, Admin and Support Services | 87.8482252387057 |
| Public Admin, Education and Health | 360.968642245842 |
| Arts, Entertainment and Other Services | 36.1247592195771 |
Household saving rose from 10.63% to 11.99% in Q2 2023 (current price seasonally adjusted). This is the second quarter in which it has risen, having been declining since its peak during the pandemic.
Household saving is added to wealth either as real assets (such as new homes), or financial assets (such as deposits), or as paying off liabilities (such as mortgage debt). In Q2 2023, before adjusting for seasonality or inflation, households saved €6.7bn. Investment in dwellings and improvements (most of which is by households) was €2.5bn. Figures from the Central Bank of Ireland show that households added €1.1bn to their deposits in banks. Loan liabilities of households to banks were up €526m in the three months, meaning households funded their current and capital expenditure through more borrowing as well as savings. Growth in dwellings and deposits therefore account for most of the saving. As earnings grow so does the value of the fixed proportion people save in pension funds; higher interest rates also mean that the increased investment income on these funds is also reinvested there. A detailed quarterly breakdown of changes in financial assets and liabilities will be published by the Central Bank.
Household saving is rising slowly again, after its post-pandemic low of 10.03% in the last quarter of 2022. We have not, so far, seen a large unwinding of deposits built up during the COVID-10 pandemic. High employment has meant increasing household incomes which have out-paced inflation so far this year.
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Statistician's Comment
The Central Statistics Office (CSO) has today (07 September 2023) released Household Saving Quarter 2 (Q2) 2023.
Commenting on the results, Peter Culhane, Statistician in the National Accounts Analysis & Globalisation Division, said: "Household saving has risen in the first two quarters of 2023, after seven successive quarters of decline in 2021 and 2022 from its high level of 28.3% in Quarter 1 2021.
Income and Consumption
The cost of living rose in Q2 2023, particularly in the Restaurants & Hotels and Recreation & Culture sectors. However, as well as paying more for the same services, people consumed more goods and services (higher volumes), particularly in supermarkets, the hospitality sector and on cars.
On the income side, wages and salaries out-paced inflation, so that in real terms, Gross Disposable Income was up.
Overall, household income has again been rising faster than consumption, and the household sector as a whole is better off, even as some households have been particularly affected by higher prices for basic goods and services."