Institutional Sector Accounts Non-Financial Quarter 2 2023

The household saving rate in the second quarter of 2023 was 10.58%. This was slightly higher than the rate of 10.30% in the first quarter of the year. Seasonally adjusted, both Total Disposable Income (TDI) and Final Consumption Expenditure (FCE, P.3) rose in the quarter.

The saving rate declined after the pandemic to a local low of 9.95% at the end of 2022 and has been rising slowly in the first half of 2023. As Figure 1.1 shows, the rate is stabilising after the rise and decline around the pandemic.  

Households used their saving to add to their wealth in the form of real assets (mainly new homes): capital spending (P.5) was €2.1bn in the period. 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 €526m in the three months.  

Household Income

Incomes of households before inflation rose in the April to June period of 2023. Overall household income is driven by pay to workers (D.1). In the second quarter of this year, average pay per hour and the number of people in work were both slightly up, driving up total wages and salaries at current prices (not taking account of inflation). Figure 1.2 illustrates the changes in current price wages by economic sector in the quarter after adjusting for seasonal factors. The wage bill increased across almost all activities except Financial & Insurance. Growth was highest in Public Administration, Education & Health, which is the largest sector, where it increased by €361m or 4.0%. There was also a significant rise in Information & Communication (€162m, or 5.1%). The largest percentage rise in compensation of employees was in Arts, Entertainment & Other Services, where a €36m increase represents 5.8% growth.

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 pension fund holdings as interest rates have risen.

While the nominal Household Total Disposable Income (TDI) rose, inflation largely wiped out any increases in household revenue in recent quarters.

Real TDI is estimated by first deflating the current price estimate of TDI. The deflator used is the implicit deflator of household consumption: that is, the ratio of current price to constant price Individual Consumption Expenditure (P.31). This price-adjusted TDI is then seasonally adjusted using an X-13 model, the model used for seasonal adjustment in the rest of the accounts.

Figure 1.3 shows TDI before and after adjustments.

Consumption

There was a slight increase in spending in the quarter (after usual seasonal fluctuations were taken into account): this increase was due to larger volumes of goods and services being consumed, as well as price inflation. The Retail Sales Index shows highest volume increases in Bars and Supermarkets, while the Services Index found growth in Accommodation & Food Service. Statistics on Vehicle Licensing showed more private cars were bought, both new and second hand, even after adjusting for seasonal factors.

At the end of March, the Consumer Price Index showed a 3-month rise of 1.7% and an annual increase of 6.1%. The biggest contributions to the rise in the Index over the 3 months came from Restaurants & Hotels and Recreation & Culture. As drivers of inflation, these services overtook Housing, Water, Electricity, Gas & Other Fuels which had been the biggest factor in other recent quarters.