Consumers boost retail but bar sales fall again

Consumers were out spending in force in February, with big-ticket items such as cars again high on their list of purchases.

Consumers were out spending in force in February, with big-ticket items such as cars again high on their list of purchases.

Figures released by the Central Statistics Office yesterday showed that the volume of retail sales was nearly 9 per cent higher last month than in February of 2004. The value of sales rose even further, climbing by almost 10 per cent, year-on-year.

The strong retail performance marks a continuation of a trend that began in January, when sales rose by 5 per cent.

Economists said the February numbers pointed to a re-awakening of the Irish consumer's love of shopping.

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Jim Power, chief economist with Friends First, said the economy was once again witnessing the "wild animal spirits" of the consumer.

"Based on trends to date, it looks as if Irish retail sales could grow by about 7 per cent in volume terms this year," he said.

He expects consumer spending to be buoyed up by stronger growth in earnings, full employment and low interest rates. Rising house prices, high levels of borrowing and strong consumer confidence will also be good for retailers, Mr Power believes.

The latest increase in the retail sales index sits well with a range of other recent economic indicators, including the surge in VAT that emerged in first-quarter Exchequer returns.

A breakdown of the February sales figures points to particular strength in sales of more expensive items.

Following growth of 20 per cent in January, the motor trade showed annual volume growth of 13.5 per cent last month. Sales of furniture and lighting rose by 15.4 per cent, while hardware sales climbed by 14.9 per cent.

Considerably less buoyant, however, were bar sales, which rose by 4.2 per cent between January and February but remained 2.6 per cent down on an annual basis.

Mr Philip O'Sullivan, economist at Goodbody Stockbrokers, said bar sales are now down by almost 5 per cent year-on-year on a moving average measure.

Mr O'Sullivan blames the drop on price inflation in the pub sector rather than on the smoking ban. Price-conscious consumers are simply switching their habits, he said.

Úna McCaffrey

Úna McCaffrey

Úna McCaffrey is an Assistant Business Editor at The Irish Times