CSO publication, 14 July 2023, 11am

Introduction

As part of the Quarterly and Annual National Accounts publications, the CSO publishes data on Personal Consumption Expenditure (PCE). A broader and more internationally comparable measure of household welfare is Actual Individual Consumption (AIC).*

PCE measures:

1. Household expenditure on goods and services.
2. Consumption expenditure of Non-Profit Institutions Serving Household (NPISH).
3. General government purchases of goods and services from market producers that are supplied to households as social transfers in kind, for example, the services provided by GPs to medical card holders.

In addition to the above, AIC measures:

4. General government social transfers in kind that are non-market produced, for example, primary school education expenditure.

AIC includes all items measured by PCE, but the general government purchases are not limited to being from market producers. Instead, AIC covers all individual expenditure.

Individual expenditure has the characteristic of being attributable to an individual, such as spending on health or education and contrasts with collective expenditure such as spending on defence. As such, AIC consists of the goods and services actually consumed by individuals, irrespective of whether these goods and services are purchased and paid for by households, by government, or by non-profit institutions serving households.

*Eurostat data for Ireland used in this release has been updated to be consistent with Annual National Accounts 2022.

Actual Individual Consumption

Figure 2 shows AIC in current prices broken down by the institutional sector financing the expenditure. The share of Government individual expenditure in AIC peaked in 2020 at 25.6% as household expenditure declined reflecting the COVID-19 related economic restrictions.

Actual Individual Consumption – Purchasing Power Standard

AIC is particularly useful for international comparisons of household welfare as it is not influenced by the extent to which services such as health and education are provided by market producers rather than non-market producers across countries.

Due to large price level differences across countries, a simple comparison of market expenditures is not appropriate. Purchasing Power Standard (PPS) is an artificial currency unit that adjusts for price level differences, allowing meaningful cross-country volume comparisons of consumption. Aggregates expressed in PPS are derived by taking the respective economic series measured at current prices in a national currency and dividing by the respective Purchasing Power Parity (PPP).

Figure 6 shows AIC per capita in PPS for 2022 and highlights that Ireland is below the EU27 average.

For further information see related Eurostat release on Actual Individual Consumption per capita in 2022.