Household spending rose 6.1% in January as consumers made new year plans

Household spending rose 6.1 per cent in January as consumers spent money on summer holiday plans as well as on gyms and sports clubs, new data from Bank of Ireland shows.

The increase for January compared with year-on-year spending growth of 4.5 per cent in December. The bank also noted that growth outpaced the current inflation rate of 1.4 per cent.

While year-on-year growth in spending with travel agencies and airlines was “modest”, spending on hotels and resorts increased by 4.9 per cent.

Spending on sports clubs saw a 23 per cent year-on-year rise, reflecting “new Year resolutions”, Bank of Ireland said.

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However, the January sales season’s impact on retail was less pronounced, with clothing sales down 5 per cent year-on-year, although electrical goods saw a 6.4 per cent increase.

Spending on services saw a 4.2 per cent year-on-year increase, driven by higher expenditure on travel and other services.

Bank of Ireland said ATM withdrawals decreased by 2 per cent year-on-year, now accounting for just 12 per cent of total card spending, down from nearly one-third in the pre-pandemic period.

“January’s credit/debit card data showing nominal spending growth of 6.1 per cent is an encouraging sign, showing households’ incomes and expenditure are now growing faster than prices,” said Bank of Ireland chief economist Conall Mac Coille.

“Notably, cash withdrawals now account for just €1 in every €10 spent by Irish households, well down from one-third just a couple of years ago.”

Looking ahead, Bank of Ireland said it is forecasting 3 per cent growth in consumer spending for 2025.

“Several indicators support this optimistic outlook, including employment growth at 3.7 per cent, a low unemployment rate of 4 per cent, and average earnings growth of 5 per cent, which is above the inflation rate of 1.4 per cent,” Mr Mac Coille said. “Budget 2025 tax cuts, worth 2 per cent of disposable incomes at the average wage, are also expected to bolster consumer spending.”