Household savings rate rises slightly, despite cost pressures

The Central Statistics Office figures on sectoral income data showed the savings rate crept up to 10.6% compared to 10.3% in the first three months of the year

The Irish savings rate was more than the rate recorded in the UK in 2021 and 2022.

The Irish household saving rate was little changed at over 10% in the three months to the end of June, despite cost pressures, new figures showed.

The Central Statistics Office (CSO) figures on sectoral income data showed the savings rate crept up to 10.6% compared to 10.3% in the first three months of the year, suggesting many households maintained a financial buffer to absorb shocks amid the ongoing cost-of-living crisis.

The household saving rate was 10.6% in Quarter 2 2023https://t.co/iTONVVUahr#CSOIreland #Ireland #Households #HouseholdSaving #Savings #Income #IrishFamilies pic.twitter.com/BDxp8n0T8w

— Central Statistics Office Ireland (@CSOIreland) October 5, 2023

There was a slight increase in spending during the period, driven by a larger consumption of goods and use of services as well as high price inflation taking its toll on consumer pockets.

“Over the same timeframe, inflation averaged 6.6% while the population increased by 1.9%. So, the spending power of the average Irish person declined by 1.3%,” said economist Austin Hughes.

Mr Hughes said the financial impact of inflation on the average household came to €3,500 last year and a further surge in living costs this year “amounts to a drain of another €3,000 in spending power to the average household”.

“These are large numbers relative to average incomes and mean relatively few households are not suffering a significant and continuing hit to spending power,” he said.

The saving rate declined from its pandemic peak of 32.5% over 2021 and most of 2022 as the economy reopened after covid and consumers were eager to splurge the money they saved on leisure activities again. The inflationary environment then put further pressure on savings.

Meanwhile, the Irish savings rate was more than the rate recorded in the UK during the same period.

The British household saving rate increased to 9.5% in the second quarter from 8.3% during the previous three months.