Retail sales fall sharply as cost-of-living crisis bites

Retail sales fell sharply in September as soaring prices prompted consumers to rein in spending on food, clothes and alcoholic drinks.

Central Statistics Office figures show sales in volume terms dipped by 3.1 per cent last month and were down by 7 per cent on an annual basis.

Of 13 sectors, 11 recorded year-on-year declines as consumers responded to the cost-of-living squeeze by cutting back on discretionary items.

The largest monthly volume falls were in food, beverages and tobacco (-7.2 per cent), clothing, footwear and textiles (-5.1 per cent), other retail sales (-5 per cent) and department stores (-4.2 per cent).

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Car sales were down by 8.3 per cent on an annual basis.

Two sectors showed an annual increase in the volume of sales compared with September last year. Bar sales rose by 7.5 per cent compared with September 2021, but the CSO noted that sales in bars were still 16 per cent lower than pre-pandemic levels. Pharmaceuticals, medical and cosmetic articles also showed an annual increase in volume terms of 1.4 per cent.

In contrast to the volume, the value of retail sales in certain sectors rose, a reflection of higher prices. Sales in the fuel sector rose by 17.6 per cent year on year while the corresponding volume fell by 3.9 per cent over the same period.

The CSO also noted the proportion of retail sales transacted online (from Irish-registered companies) rose marginally to 5.3 per cent in September from 4.8 per cent in August.

The latest figures point to a deteriorating outlook for retail. They come on the back of a separate report from AIB, which suggested consumers were cutting back on discretionary items such as clothes and hardware.

The latest AIB retail spend outlook report showed that discretionary spending declined in the third quarter of this year when compared with the same period last year.

While overall sales rose by 3.8 per cent in value terms, this rise can be explained by a rise in prices. In the third quarter, consumer prices were 8.6 per cent higher than in 2021, outpacing the rise in spending.

Separate figures published on Friday show that Irish consumer prices, harmonised to compare with other European Union member states, rose by 9.5 per cent on an annual basis in October.

This measure of inflation, based on CSO’s harmonised index of consumer prices (HICP), is different from the agency’s consumer price index (CPI), which put the headline rate of inflation here at 8.2 per cent in September. Nonetheless the HICP measure of price growth was up from 8.6 per cent in September, suggesting the inflation trend here may still be accelerating.

The main driver was energy prices. They are estimated to have increased by 13.6 per cent in October and by 47.6 per cent compared with a year ago. When energy prices are excluded, inflation was 5.9 per cent higher on an annual basis.