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The Household Saving Rate was 10.19% in Quarter 4 (Q4) 2023, down a little from 10.47% the previous quarter.
Before adjusting for seasonality or inflation, the last quarter of the year usually sees saving at its lowest and in Q4 2023 households saved €207m.
In current prices, both consumption and income rose. Households' spending increased slightly more than revenues, causing a decline in savings.
For the year 2023 as a whole, after taking account of inflation, household consumption increased by 3%, while incomes grew by 1%.
As spending accelerated faster than incomes, the saving rate fell from 12% in 2022 to 11% in 2023.
Households added €16.8bn in saving to their wealth in 2023, compared to €17.6bn in 2022.
Prices at the end of the Quarter (December) were at the same level as at the end of the previous quarter (September), but 4.6% higher than a year previously. The Consumer Price Index over the three months showed a decline in Energy prices, which had been a driver of inflation in recent years.
After taking out price rises consumption was unchanged over the previous quarter. The Retail Sales Index volume was down slightly overall, with Electrical Goods being the only sector significantly up. In the consumer-facing sectors of the Services Index there were declines in Food and Accommodation service volume, but a rise in Other Services (such as gambling and hairdressing).
In the year 2023 as a whole, consumption was up 10% in current prices and 3% after taking account of inflation. Spending increased on goods, including cars, and on services, with notable increases in foreign travel and public transport.
Total Disposable Income (TDI) of households rose slightly (0.48%) in the fourth quarter. This is after adjustment for inflation and seasonal factors. Due to inflation, incomes are rising more slowly than they did before the pandemic. At the end of 2023, even taking into account inflation, household incomes were higher than they were at the start of the year. This is in part due to more people being in work.
Compensation of Employees (CoE) at current prices seasonally adjusted rose by 1.4% compared to Q3 2023. Figure 3 illustrates the changes by economic sector in the quarter after adjusting for seasonal factors. All economic activity sectors paid more to their workers in the quarter. The most significant rise was in Industry, which grew by 2.3%. This increase was due to more people in work, rather than higher average earnings. The Earnings, Hours and Labour Costs Survey showed a slight decline in seasonally adjusted average hourly earnings (-0.13%), while the Labour Force Survey showed numbers employed were up 4% in the year and 1% in the quarter. There were 2.7 million people in employment in Ireland at the end of 2023, which is 14% more than there were four years previously.
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 Q3-2023 €m |
|---|---|
| Agriculture, Forestry and Fishing | 11.2543386373946 |
| Industry (excl. Construction) | 105.678250481798 |
| Construction | 46.966164794183 |
| Distribution, Transport, Hotels and Restaurants | 86.3967448492085 |
| Information and Communication | 28.2282577956853 |
| Financial and Insurance Activities | 24.9242009795998 |
| Real Estate Activities | 4.36609547826947 |
| Professional, Admin and Support Services | 80.9896331563459 |
| Public Admin, Education and Health | 61.2299122775785 |
| Arts, Entertainment and Other Services | 11.1407502402803 |
Household saving declined slightly from 10.47% to 10.19% in Q4 2023 (current price seasonally adjusted). While the rate is broadly stable, as Figure 4 shows, this is the third successive quarter in which the rate has declined.
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 Q4 2023, before adjusting for seasonality or inflation, households saved €207m. The last quarter of the year is a season of high consumption and end-of-year settlement of taxes, so this period has the lowest saving in the year.
Investment in dwellings and improvements (most of which is by households) was €3.6bn. Figures from the Central Bank of Ireland show that households' deposits in banks in Ireland declined by €466m. Loan liabilities of households to banks were up 753m in the three months, meaning households funded their current and capital expenditure through more borrowing as well as from deposits. A detailed quarterly breakdown of changes in financial assets and liabilities will be published by the Central Bank.
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Statistician's Comment
The Central Statistics Office (CSO) has today (11 March 2024) released Household Saving Quarter 4 (Q4) 2023.
Commenting on the results, Peter Culhane, Statistician in the National Accounts Analysis & Globalisation Division, said: "Household saving fell slightly in the last three months of 2023 and in the year as a whole. Inflation continued to drive consumption in the year, while the rising number of people in work is keeping incomes up."