Rate of decline in retail sales slowing

THE RATE of decline in retail sales volumes is slowing, but was still 17 per cent lower in the year to April, according to the Central Statistics Office (CSO).

This compares with an annual decrease of 17.7 per cent in March.

A 50 per cent drop in the volume of new car sales is the primary reason for the annual decline, although there have been huge falls in sales of products linked to the property sector.

If the impact of car sales was excluded, annual retail sales volumes were 7.1 per cent lower in April and up 0.5 per cent in the month. Overall sales rose 2.3 per cent in the month of April.

Lynsey Clemenger, economist with Ulster Bank, said a 4.2 per cent increase in food sales was one of the main reasons for the monthly rise, as this category represents over a third of the index.

She said the first quarter of 2009 was likely to be the low point for retail sales, but added that consumer spending would remain subdued for the rest of the year.

The April data came before the full impact of the tax changes and higher levies introduced in the supplementary budget was felt.

Alan McQuaid, economist with Bloxham Stockbrokers, also struck a cautiously optimistic note, saying the “worst may be over”. Persistent deflation should boost retail sales over the coming months, he said. However, Mr McQuaid said the Government needed to develop a more ambitious economic plan than “just taxing the PAYE worker”.

Leo Varadkar, Fine Gael enterprise, trade and employment spokesman, said the Government needed to seek to reduce energy costs and reverse last year’s VAT increase.

According to David Fitzsimons, chief executive of Retail Excellence Ireland, the 7.1 per cent decline in retail sales excluding the motor sector was a “significant understatement” of the decline.

The retailers’ representative group expects data for May and June to be “aggressively negative” due to the impact of tax and levy increases.

The impact of the housing slump can be seen from a 38 per cent drop in annual sales volumes for furniture and lighting products and a 17.7 per cent decline in hardware, paints and glass products over the same period.

Sales in non-specialised stores – predominantly supermarkets – rose 3 per cent in the month; bar sales fell 5.2 per cent, with the annual decline in bar sales now at 12 per cent.