CONSUMERS showed signs of bucking economic gloom last month, with the latest official figures showing the first increase in retail sales in four months, writes UNA McCAFFREY
The Central Statistics Office (CSO) said yesterday that the volume of retail sales excluding cars was 2 per cent higher in June than in the previous month. There was also some encouragement in the value of sales, which climbed by 0.1 per cent over the month.
Sectors showing notable increases in volume terms included clothing and footwear and department stores, reflecting generally lower prices on the high street. While sales were still substantially down on an annual basis, most commentators took a provisionally positive stance on the numbers.
Ibec chief economist David Croughan said the figures showed “a welcome reversal of the very negative trend in retail sales”. He said there was clear evidence that prices were falling, thus leading to a boost in shoppers’ real purchasing power.
While stressing the need to be conservative when interpreting monthly data, Dermot O’Leary of Goodbody Stockbrokers said there was no evidence of a “spending strike” in the aftermath of the April budget, when personal taxation rates rose. He said June brought the best performance for sales volumes since last September.
A breakdown of the data shows that, while almost all retail sectors showed an annual decline in sales in June, monthly increases were recorded in six categories.
The biggest jump came in pharmaceuticals, medical and cosmetic sales, which were ahead by 12.1 per cent, helped by warmer weather in the early summer, or perhaps timing factors linked to the Drugs Payment Scheme.
Hardware and paint sales climbed by 7.8 per cent and clothing and footwear outlets reported a 3.2 per cent monthly increase in sales volumes.
The trend remained negative in several sectors, however, with bars showing a 3.4 per cent fall in volumes and sales in furniture and lighting shops down by 4.3 per cent. The effect on the latter category is even more starkly illustrated by annual comparisons, showing a 28.5 per cent drop.
On an overall basis, retail sales, which comprise roughly two-thirds of consumer spending, were 5.5 per cent weaker in June than a year earlier. When motor sales were included, sales fell off by almost 10 per cent.
Lynsey Clemenger, economist at Ulster Bank, noted that total retail sales were considerably less negative in the second quarter, falling by an average of 13.9 per cent compared to 21.9 per cent in the first three months of the year.
She said the June figures provided “an encouraging, if tentative, omen for retail prospects in the third quarter”.
The data does not, however, mask the expanding gaps in the consumer-linked aspects of the public finances, such as VAT. Last week’s exchequer returns showed a €448 million gap between the projected and actual level of VAT returns for April to July.
