Institutional Sector Accounts Non-Financial Quarter 4 2021

The household saving rate in the last quarter of 2021 was 15%. This is the third quarter in a trend towards a more normal level of saving. In the last three months of 2021 we saw the usual large increase in spending coming up to Christmas, but when we adjust to take account of this seasonal uplift, the value of consumption by households rose by just 0.6% over its value in the third quarter. Sales of cars and electronics declined, but the value of household spending on furniture and clothing was up as the CSO's Retail Sales Index shows.

Overall seasonally adjusted Total Disposable Income declined in the last quarter of 2021 by 2.0% compared to the previous three months. This was due to reduced social benefits (such as the Pandemic Unemployment Payment) and higher taxes. However, workers' earnings (Compensation of Employees or CoE) before deductions increased in the period. Figure 1.2 shows the change in Q4 CoE compared to Q3 after adjusting for seasonal factors. In services where people could work from home (for example, finance, IT and professional services) and in industry, increases in the total pay bill continued. The sector most affected by restrictions (Distribution, Transport, Hotels and Restaurants) also saw an increase in pay to workers in the last quarter of 2021: if we include the €551m Employee Wage Subsidy Scheme, total payment to workers in these retail and hospitality enterprises in quarter 4 was even higher than the equivalent period of 2019.

Household saving was €27bn in the year as a whole, down on 2020 (when it was €32bn) but more than double the pre-pandemic level of €12bn in 2018 and in 2019. The saving rate was 21%, that is, more than one euro in every five euro in income went into increasing wealth.

Consumer spending increased by €9.1bn (10%) and was only 2% below the total in 2019, before the pandemic began. Part of the increase in spending was due to higher prices: the Consumer Price Index was 6% higher at the end of 2021 than it was at the end of 2020.

Income from work (self-employed (B.2A3G) or otherwise (CoE)) grew by €10.4bn in the year 2021. While consumption and labour income largely offset each other, changes elsewhere in the account meant that saving was €4.3bn lower in 2021 than it was in 2020. The largest drag on disposable income was taxes: higher incomes meant that households paid €4.7bn more in the latest year than in the first year of the pandemic. Increased income also went into pension saving and social contributions (D.61) such as PRSI, which were up €1.8bn in the twelve months. 

Of the €27 billion saved in the year, around €6bn was used to buy real assets such as new homes or extensions. The remaining €21 billion went into improving the finances of households, either building up assets (as deposits, pension saving, shares or other financial investment) or reducing liabilities (paying off mortgages and other debts).

The seasonally adjusted data series which includes Gross Disposable Income, Personal Consumption of Goods and Services and Gross Saving of the Household incl. NPISH sector is available on PxStat. Only the most significant transactions are shown in the table for each sector in this release. The entire unadjusted series for all variables published in this release are also available at the same link. See Background Notes for definitions of the terms used.

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