Institutional Sector Accounts Non-Financial Quarter 3 2023

The household saving rate in the third quarter of 2023 was 10.08%. This was a decline from the rate of 11.05% in the first quarter of the year. Seasonally adjusted, Final Consumption Expenditure (FCE, P.3) rose faster than Total Disposable Income (TDI) in the quarter.

As Figure 1.1 shows, the rate is around the same level it was before the pandemic. The saving rate declined after the pandemic to 10.25% at the end of 2022 and rose again in the first half of 2023 before another decline this quarter.   

Households used their saving to add to their wealth in the form of real assets (mainly new homes): unadjusted, saving (B.8g) was €4.4bn in the quarter and capital spending (P.5) was €2.3bn. 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 €0.7bn in the three months. Households also increased their assets in pension funds and life assurance assets; full accounts of assets and liabilities in financial instruments will be published by the Central Bank.

Household Income

Overall household income is driven by Compensation of Employees (CoE (D.1), pay to workers). At current prices, CoE was €32bn in the quarter, 6% higher than Q3 2022. Seasonally adjusted, compared to Q2 of this year, it declined by 0.4%. 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.

Comparing year-on-year, higher take-home pay meant higher taxes (D.5) and PRSI (D.61) paid by households (see Table 1.2, below). There was also higher investment income received (D.4) on assets such as deposits and pension fund holdings as interest rates have risen.

Gross Disposable Income was €38bn in Q3 2023 before price and seasonal adjustment. Total Disposable Income (TDI, which also includes the adjustment for the change in pension entitlements (D.8)) was €39bn in the quarter, an increase of €2.6bn or 7% on Q3 2022. While nominal Household Total Disposable Income (TDI) rose, inflation also ran at 7%, and this wiped out any increases in household revenue in real terms in the quarter. Figure 1.3 shows TDI before and after adjustments.

Consumption

Price increases added 7.1% (Macroeconomic Briefing Q3 2023) to household consumption in Q3 2023 compared to the same quarter last year. The biggest contributions to the rise in the Consumer Price Index over the July-September period 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.

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.