Irish households have over €40 billion sitting in deposit accounts earning interest at an annual rate which is lower than the rate of inflation.

Central Bank deposit statistics show the amount of money on "overnight deposit" at an average interest rate of just 0.24% is was €4 billion higher in May than in the same month last year.

Inflation is running at an annualised rate of 0.4% meaning the purchasing power of that €40 billion is being eroded.

Most of the interest earned on those deposits is also being taxed at rate of 41% since January after an increase in the DIRT (Deposit Interest Retention Tax) rate in last October's budget.

The amount of household savings on deposit for longer terms has fallen over the past year, however. Deposits which are redeemable at notice have fallen from €9.5 billion to €9.3 billion.

Amounts on deposit for a period of up to two years are down from €29.9 billion to €26.1 billion. The rate of interest being earned on those savings has fallen from an average of 2.78% to 1.97% over the past 12 months.

Separately the Central Bank released figures showing the level of outstanding mortgage debt with more than five years to run, which represents the vast majority of home lending, has dropped from €82.4 billion to €81.9 billion over the past year.

Personal loan volumes are down sharply with the amount of debt due to be repaid with a maturity of over five years down from €9.8 billion to €8.2 billion.

The level of short term debt, due to be repaid within two years, has also fallen since May of last year.