Households have continued the saving habit established during Covid as fears of rising costs upended expectations that a consumption boom would follow the end of the lockdown.
In the three months of April to June, Irish households saved nearly 20 per cent of their income, twice what it was before the pandemic.
Higher average earnings per worker and more people in the labor force meant households had, on average, higher disposable incomes to support this saving habit, although spending also increased over the period due in part to higher prices, according to the Central Statistics Office (CSO). shows.
For households as a whole, disposable income grew faster than consumer prices, although this was not the case for all households. Saving is always geared toward better-off households with poorer families who are far less likely to have a surplus to throw away, but the numbers suggest a significant financial cushion for consumers facing a winter of higher prices and high energy bills.
Before the pandemic, households saved about 10 percent of their total disposable income, with consumer spending accounting for the other 90 percent.
In the first half of 2022, consumption accounted for 80 per cent of income, although rising employment and wage levels mean the share of income in real terms has increased.
CSO statistician Peter Culhane said: “We are seeing a steady increase in real incomes as more people work and the average wage increases, as does the amount of goods and services purchased or consumed.”
Before the pandemic, consumer spending grew in line with incomes, while savings held steady. This pattern was turned on its head by Covid, when many incomes were protected by government wage subsidies but opportunities to spend were constrained by lockdowns including closed pubs and a temporary ban on foreign bank holidays.
With the pandemic restrictions now gone, the household saving rate remains well above its usual level.
The CSO says households are saving and have generally chosen not to spend their lockdown savings, instead keeping their money in the bank.
https://www.independent.ie/business/irish/irish-households-save-20c-per-euro-earned-as-lockdown-habit-beds-in-41976381.html Irish households save 20 cents per euro earned by staying in bed