Irish households increase their savings as wage rises outpace inflation

Irish households saved more money in the second quarter of the year despite continued pressures from rising interest rates and the cost of living, with increases in wages and salaries outpacing inflation, new figures from the Central Statistics Office (CSO) show.

The household saving rate was just under 12 per cent in the second quarter (April to June), rising from 10.63 per cent in the first three months of the year.

Households saved a total of €6.7 billion in the quarter, with €1.1 billion added to bank deposits and investment in homes at €2.5 billion.

The increase in saving marks a second quarter of rises and a shift away from seven successive quarters of decline in 2021 and 2022. But the rate is still far lower than the peak recorded in the first quarter of 2021, when the pandemic restrictions helped push the saving rate to more than 28 per cent. The average savings rate during the Covid-19 pandemic was 20 per cent, with Irish households placing an additional €16 billion on deposit during the pandemic.

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The CSO noted the cost of living continued to rise in the second quarter of the year, particularly in the restaurants, hotels and recreation sectors. But the period was also marked by an increase in the volume of consumption of goods and services, with supermarkets, the hospitality sector and cars all seeing an increase despite people paying more for the same services as gross disposable income also rose in real terms.

“Overall, household income has again been rising faster than consumption and the household sector as a whole is better off, even as some households have been particularly affected by higher prices for basic goods and services,” said Peter Culhane, a statistician in the CSO’s national accounts and globalisation division.

Irish households saw their total disposable income rise in the second quarter of the year, up 1.2 per cent for the three-month period and reversing in part a decline seen in the early part of 2023. The CSO noted that it was a small increase but said incomes were outpacing significant price rises.

Employee remuneration rose 3 per cent quarter on quarter, led by rises in public administration, education and health, and the information and communication sector, as average weekly pay rose and more people were employed.