The Household Saving Rate was 9.58% in Quarter 3 (Q3) 2023, down from 10.91% the previous quarter.
In Q3 2023, before adjusting for seasonality or inflation, households saved €4.2bn.
In current prices, both income and consumption rose, with a decline in savings due to consumption increasing more than disposable income.
Prices at the end of the Quarter (September) were 0.9% higher than at the end of the previous quarter, but 6.4% higher than a year previously. The biggest contributions to the rise in the Consumer Price Index over the three months came from Restaurants & Hotels and Recreation & Culture. Energy, which had been a driver of inflation in recent years declined in price in the third quarter.
As well as higher prices, there were also slightly higher volumes of consumption (0.6%) in the quarter mainly due to tourism and travel.1 Departures from the country are up 12% for the quarter compared to this time last year. Also, public transport (excluding LUAS) is up 16.5%. The Retail Sales Index volume was down overall, with Furniture & Lighting being the only sector significantly up. In the consumer-facing sectors of the Services Index there were also declines. Statistics on Vehicle Licensing showed fewer new private cars were bought, although slightly more second hand cars were bought, after adjusting for seasonal factors.
Total Disposable Income (TDI) of households declined slightly (0.7%) in the third quarter. This is after adjustment for inflation and seasonal factors. While incomes generally rose during the pandemic, with high inflation in recent quarters, real household incomes have experienced low growth or decline, as shown in figure 2.
Compensation of Employees (CoE) at current prices seasonally adjusted declined by 0.4% compared to Q2 2023. Figure 3 illustrates the changes by economic sector in the quarter after adjusting for seasonal factors. The most significant decrease was in Distribution, Transport, Wholesale & Retail, which was down €148m (2.5%) in the quarter. This is a large sector both by total CoE and by numbers employed. Real Estate showed a larger percentage decline (3.6%) but this is a relatively small sector. The largest sector – Public Administration, Education & Health, showed a rise of €157m (1.7%) in CoE in the quarter.
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 | 3.22267221889285 |
| Industry (excl. Construction) | -2.14764605303935 |
| Construction | -31.5428235912632 |
| Distribution, Transport, Hotels and Restaurants | -148.299752704423 |
| Information and Communication | -70.3793832184369 |
| Financial and Insurance Activities | 12.5861230187229 |
| Real Estate Activities | -9.7112429897993 |
| Professional, Admin and Support Services | -46.1395799077454 |
| Public Admin, Education and Health | 157.309804798757 |
| Arts, Entertainment and Other Services | 4.00473897986615 |
Household saving declined from 10.9% to 9.6% in Q3 2023 (current price seasonally adjusted). This follows two quarters in which the rate increased slightly, and it now hovers around its 2019 pre-pandemic level.
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 Q3 2023, before adjusting for seasonality or inflation, households saved €4.2bn. Investment in dwellings and improvements (most of which is by households) was €2.3bn. Figures from the Central Bank of Ireland show that households added €1.1bn to their deposits in banks in Ireland. Growth in dwellings and deposits therefore account for most of the saving. As current price 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. Loan liabilities of households to banks were up €0.7bn in the three months, meaning households funded their current and capital expenditure through more borrowing as well as savings. A detailed quarterly breakdown of changes in financial assets and liabilities will be published by the Central Bank.
Household saving declined in the quarter, after small rises earlier in the year. While consumption continues an upward trend, even though there are more people in work, incomes did not rise as fast as consumption and did not keep pace with price rises.
1 For this release, Final Consumption Expenditure of Households (ESA 2010 item P3) is used, while for the Quarterly National Accounts, Personal Consumption Expenditure is used, which includes some expenditure by Government via Households. These have slightly different rates of increase.
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Statistician's Comment
The Central Statistics Office (CSO) has today (08 December 2023) released Household Saving Quarter 3 (Q3) 2023.
Commenting on the results, Peter Culhane, Statistician in the National Accounts Analysis & Globalisation Division, said: "Household saving fell in the July to September (Q3) period this year after rising in the first six months of the year. At 9.58% this quarter, this is the first time it has fallen below 10% in three years but leaves it at a similar level to pre-pandemic savings in 2019."