HOUSEHOLD savings have hit their highest level since the last financial crisis.
People spent less in the first three months of the year which meant that they put more money aside.
The savings level was higher than any time in the last six years, the Central Statistics Office (CSO) said.
“Household saving increased in the first quarter of 2020, as employee pay went up, while consumer spending decreased,” the statisticians said.
This means the savings ratio hit 16.4pc, its highest level since 2009.
What is called the derived saving ratio measures the relationship between saving and income.
The CSO found that the gross income in the State was up in the first quarter when compared with the last three months of 2019.
This was despite large numbers of people being laid off and forced to depend on the Pandemic Unemployment Payment, with others supported by the Temporary Wage Subsidy Scheme.
The CSO said gross disposable income rose from €30.19bn in the last three months of last year to €30.604bn in the first quarter.
Gross spending in the economy fell from €26.13bn in the last quarter of last year to €25.6bn in the January to March period of this year.
This meant the savings ratio was up.
Senior statistician with the CSO Michael Connolly said the figures were showing a rise in income despite the disruption to employment caused by the pandemic.
The CSO now uses Revenue’s new PAYE Modernisation real time data on incomes. This was introduced this year and is more robust than the previous methods for capturing incomes, he said.
The latest CSO data comes after Central Bank Governor Gabriel Makhlouf said households have had no choice but to cut their spending during the pandemic.
This applies especially to those who have not had a loss of income, he wrote in his latest blog.
“They have been unable to consume goods and services as they normally would as a result of the restrictions imposed for health reasons,” he wrote.
He said consumers may also willingly be spending less due to the high degree of uncertainty around both their incomes and potential risks to their own health.
Governor Makhlouf noted that household deposits have increased sharply since the crisis started.
He said what he called the exceptional increase may be linked to limited spending opportunities and stable income due to Covid-related supports.
But the growth in deposits has been evident since mid-2018, for both Irish and Euro area households, he noted in his blog.
This rise was due to precautionary saving.
The Central Bank boss said economic uncertainty has increased in recent years, due to the withdrawal of the UK from the EU and rising geopolitical trade disputes.
Given these uncertainties, households may have been saving to provide protection against potential shocks.
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