Retail sales jump 12% ahead of euro

Retail sales surged nearly 12 per cent in the run-up to Christmas as consumers spent their hoarded pounds ahead of the introduction of the euro. The value of sales in December rose by 11.9 per cent on a year earlier, according to figures released by the Central Statistics Office (CSO) yesterday.

If the motor sector, which suffered last year after a bumper year in 2000, is excluded, sales were up by an even stronger 13.7 per cent.

"These are remarkable numbers," said Mr Austin Hughes, economist at IIB Bank. "They bear out all the anecdotal evidence of heavy spending of 'mattress money'." He was referring to hoarded and illicit Irish currency which was unearthed from various places, including under the mattress, in the run-up to the euro.

A number of other factors also boosted retail spending such as the payments made to Eircom shareholders after its takeover by Valentia, a sharp reduction in interest rates which cut mortgage bills, and oil price cuts, which lowered the cost of petrol, analysts said.

In volume terms, sales were up by 9.1 per cent year-on-year in December while in the three months from October to December, they rose by 4.3 per cent on the previous quarter.

The strong fourth-quarter performance helped boost sales figures for the year as a whole although they remained well below the previous year's levels. Retail sales rose by just 3.1 per cent in volume terms last year, well below the 11.9 per cent recorded in 2000.

Analysts believe sales will show a much weaker trend in the early part of 2002.

Smaller budget tax concessions than last year, an increase in value added tax and the bringing forward of spending because of the introduction of the euro are likely to dampen retail activity this year.

Meanwhile, other figures released yesterday painted a mixed picture of the economy.

They showed employment in the financial sector rose by 1,600 between June 2000 and June 2001 while the average weekly earnings of those in banking, insurance and building societies rose by 15.1 per cent over this period. By contrast, the numbers employed in construction fell by 2.9 per cent last year.