Household Saving Q2 2024

Consumption and Prices

Household consumption was €38bn in the second quarter of 2024, up from €36bn in the equivalent period last year, a rise of 6% in current prices seasonally adjusted. After taking out price rises consumption rose by 1% over the second quarter of 2023. Consumption of goods decreased while service purchases increased. In the consumer-facing sectors of the Services Index there was significant growth in Accommodation & Food Service (+7%). On the other hand, the Retail Sales Index volume was down slightly (-1%), with Furniture & Lighting showing the biggest decline (-7%). 

The difference between the price-adjusted and unadjusted increase in consumption is around 5%. The Consumer Price Index (CPI) rose by just 2.2% over the twelve months since June 2023, however, households experienced greater price rises, as the CPI does not include some expenditure by households such as purchases abroad. The CPI showed the divisions with the largest increases in the 12 months to June 2024 were Transport (+4.9%) and Restaurants & Hotels (+4.4%). There were declines in prices in Clothing & Footwear (-6.7%) and Furnishings, Household Equipment & Routine Household Maintenance (-1.1%).

Income

Total Disposable Income (TDI) of households rose by 6% in the second quarter of 2024 compared with the equivalent period in 2023; but it declined by 1% when compared with the first quarter of 2024. This is after adjustment for seasonal factors. If we also adjust for price changes, TDI saw a 12-month increase of 1%, and a 3-month decline of 1%.  Before adjustments, total household income in the quarter was €44bn.

The largest component of household income is Compensation of Employees (CoE). At current prices seasonally adjusted this was largely unchanged compared with the first quarter of the year (-0.1% change). Beneath this, there were significant movements at sectoral level. Figure 3 illustrates the differences by economic sector in the quarter compared to Q1 2024 after adjusting for seasonal factors. There was a significant rise in Public Administration (+€302m or +3%), while the Professional, Scientific & Technical sector saw a decrease in pay to workers (-€190m or -3%). Changes were smaller in other sectors. 

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. 

Saving

Household saving declined to 12.7% in Q2 2024, compared with 14.6% in the first three months of the year (current price seasonally adjusted). As Figure 4 shows, this is the lowest rate in recent quarters, but it is not part of any clear trend: the rate has been going up and down since the start of 2023. The first quarter of 2024 was unusually high, higher than any of the prior three quarters.

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 2024, before adjusting for seasonality or inflation, households saved €6.6bn. Investment in dwellings and improvements (most of which was by households) was €3.7bn. Additions to pension funds (D.8) were €1.1bn. Figures from the Central Bank of Ireland show that households' net deposits into banks in Ireland rose by €2.0bn over April, May and June. Loan liabilities of households to banks were also up €0.7bn in the three months, meaning households took out more loans than they paid off. A detailed quarterly breakdown of changes in financial assets and liabilities will be published by the Central Bank and a revised saving estimate from the non-financial accounts will be published in the coming weeks.