Higher average earnings per worker and more people in work drove up incomes.
As incomes rose, this did not translate into more spending.
Price increases, rather than more consumption, accounted for the slight rise in current expenditure by households.
Households were saving nearly €1 for every €4 they spent in the quarter.
The Central Statistics Office (CSO) has today (09 June 2022) released Household Saving Q1 2022.
Commenting on the results, Peter Culhane, Statistician, said:
"At 19%, household saving in early 2022 was higher than the previous two quarters and almost twice its pre-COVID average. We are seeing a continual increase in incomes, which are now significantly higher than their pre-pandemic levels as more people are in work and the average wage is going up. This has not been matched by growth in spending, despite high inflation. These price rises in themselves as well as uncertainty caused by international events could have influenced decisions to spend or to save. Full reopening of society and businesses only came in the course of the first quarter which might also have affected spending."
Incomes of households rose in the quarter as reopening continued. Overall household income is driven by pay to workers and the combination of higher average pay per hour and more people in work drove up wages and salaries. Total earnings increased across almost all sectors and growth was largest in Public Administration, Education & Health (sectors O-Q); Professional, Scientific & Technical Services (M-N); Industry (B-E); and Retail, Wholesale, Hotels & Restaurants (G-I).
|Agriculture, Forestry |
and Fishing (A)
|Distribution, Transport, Hotels and Restaurants (G-I)||121.079561546237|
|Information and Communication (J)||52.0288831684784|
|Financial and Insurance Activities (K)||-2.32961086142313|
|Real Estate Activities (L)||11.5642719737705|
|Professional, Admin and Support Services (M-N)||180.561802686483|
|Public Admin, Education and Health (O-Q)||194.491107650673|
|Arts, Entertainment and Other Services R-T)||9.6140531647327|
There was a slight rise in spending in the quarter (after usual seasonal fluctuations were taken into account): this increase was due to price inflation, rather than larger volumes of goods and services being consumed. The Consumer Price Index shows prices were 5.8% higher in the quarter compared with the first quarter of 2021. The biggest changes were in Transport (+16.1%), Housing, Water, Electricity, Gas & Other Fuels (+14.0%), Alcoholic Beverages & Tobacco (+7.7%) and Food and Non-alcoholic Beverages (+2.7%). As these living costs rose, people bought less in shops, as can be seen in the Retail Sales Index. Seasonally adjusted, the Index showed a decline in volume of purchases in the first quarter, even as the last COVID-19 restrictions were phased out. Sales of cars, and sales of household equipment declined most significantly, but there were increases in sales of clothes and shoes.
The saving was added to household wealth which is held in various kinds of assets. Investment in homes (new builds and improvements) was €2.6bn in the quarter, most of which came from households (although part of this is held by government and corporations). A significant proportion of the saving was left in banks: deposits from households increased by €2.0 billion in the quarter. Short-term deposits such as current accounts were where most new saving went, with some decline seen in holdings of longer-term savings. Central Bank of Ireland data also shows some saving went to paying off debts: lending to Irish households decreased by €658m in the quarter (that is, repayments of principal exceeded new draw-downs).
The pandemic disrupted household saving significantly, driving it up to a peak of 33% in Q2 2020, far from the long-term average rate of around 10%. The rise in the household saving rate in Quarter 1 comes after three successive quarters in which it had been declining back towards the average. While COVID-19-related restrictions ended in the quarter some supply constraints remained; rising inflation and international events may also have made households cautious about resuming pre-pandemic trends in consumption. This led to another quarter of extraordinary saving levels.