Households saved 19.1 per cent of their earnings in the first quarter of 2022 and almost €1 for every €4 they spent during the period, according to new data from the Central Statistics Office (CSO), which described it as “another quarter of extraordinary saving levels”.
While the saving rate is lower than that seen throughout 2020 and in the first half of 2021 – when consumers had fewer outlets for spending as a result of pandemic lockdown measures – it has risen from 15.8 per cent in the fourth quarter of 2021, which had been the third consecutive quarter of decline. The long-term average is about 10 per cent.
“At 19 per cent, household saving in early 2022 was higher than the previous two quarters and almost twice its pre-Covid average. We are seeing a continual increase in incomes, which are now significantly higher than their pre-pandemic levels as more people are in work and the average wage is going up,” said CSO statistician Peter Culhane.
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“This has not been matched by growth in spending, despite high inflation. These price rises in themselves as well as uncertainty caused by international events could have influenced decisions to spend or to save. Full reopening of society and businesses only came in the course of the first quarter which might also have affected spending.”
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Average household incomes rose due to higher average pay per hour and more people being in work, with total earnings increasing across almost all sectors. But while there was a slight rise in spending in the quarter, after the usual seasonal fluctuations were taken into account, the increase was due to price inflation rather than people buying a larger volume of goods and services.
As living costs increased, people bought less in shops. Seasonally adjusted, there was a decline in the volume of purchases in the first quarter, even as the last of the Covid-19 restrictions were phased out, suggesting households are taking a more cautious approach to spending in light of the cloudy economic outlook or are indeed already feeling the pinch from higher prices. Sales of cars and sales of household equipment declined most significantly. Sales of clothes and shoes increased, however.
The pandemic prompted significant disruption to household saving, which surged to a peak of 33 per cent of earnings in the second quarter of 2020 and spiked again the in the first quarter of 2021, at a rate of 30.9 per cent.
