This note presents revised and updated estimates of sectoral saving and financial balances adjusted for the effects of price inflation on monetary assets and liabilities. The decline in the rate of inflation since 1980 has had a marked effect on inflation-adjusted saving and financial balances of the major sectors, as did its earlier rise. In particular, the less rapid erosion by inflation of the real value of personal sector monetary assets is thought to be a significant factor underlying the strong recovery in consumption in a period when conventionally measured real personal disposable income was little better than flat.
Inflation-adjusted saving and sectoral balances