Household savings drop as standard of living declines

Taking inflation into account, household income was down by 0.8 per cent between July and September 
Household savings drop as standard of living declines

Michael McAleer

The amount of money households are saving declined in the third quarter, as new figures show the standard of living for Irish households also declined.

Households saved 19 per cent of their income between July and September, down from 20 per cent in the previous three months. However, the figure is still well above pre-Covid levels, when household savings averaged just 10 per cent of income.

Figures from the Central Statistic Office (CSO) show the standard of living for Irish households has declined in three of the last four quarters. Taking inflation into account, household income was down by 0.8 per cent between July and September.

According to the CSO, while household earnings were up as more people were in work, inflation outpaced this growth, leaving real income lower.

Peter Culhane of the CSO said: "Current price income has been rising steadily as more people are in work and the average wage is going up. However, real income has declined in three of the last four quarters as price increases have out-paced incomes."

He said household spending rose between July and September, not only due to higher prices, but also because a greater volume of goods and services were bought or consumed.

On the drop in savings, he said this is part of a slow trend towards lower saving seen over several quarters. "The saving level remains above its pre-Covid-19 level of around 10% as some of the savings habits developed during the restrictions are maintained. Households have generally decided not to spend their savings, but to continue to add to their assets and reduce their borrowing."

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