Household savings dip as spending outpaces incomes despite employment growth

The saving rate declined from 12% in 2022 to 11% by the end of last year according to figures from the CSO. Picture: Andy Gibson. Picture Denis Minihane.

Household savings declined marginally last year despite record employment levels, showed new figures from the Central Statistics Office (CSO).

The saving rate declined from 12% in 2022 to 11% by the end of last year according to figures from the CSO, which suggested wages have not increased with inflation as spending outpaced incomes. 

Households saved €16.8bn compared to €17.6bn in the previous year.

Overall household savings fell marginally in the last three months of 2023 as consumers were less frugal during the holiday period and relatively high inflation drove consumption.

The household savings rate declined from 10.47% in the three months to the end of September to 10.19% in the following three months as cost pressures, mainly energy, stabilised.

Meanwhile, consumers dipped into their savings and continued to borrow from lenders last year despite a high interest rate environment to fund household improvement projects, according to the CSO.

Investment in dwellings and improvements reached €3.6bn last year while deposits in banks declined by €466m and loan liabilities of households were up €753m, showed separate figures from the Central Bank.

Some experts, including economist Austin Hughes, have recently warned that many consumers remain financially vulnerable and are unable to save to the same extent as wealthier households.