The volume of retail sales fell by 0.8 per cent in February as Irish consumers bought fewer cars and spent less on clothing and footwear.
The latest snapshot of retail trends here was taken before the current energy price shock, which is expected to put renewed pressure on household budgets.
The sectors with the most dramatic falls in sales volumes in the month were clothing, footwear and textiles (-4.4 per cent), hardware, paints and glass (-3.6 per cent) and motor trades (-1.4 per cent).
When car sales, which have a higher weighting, are removed the volume of sales increased by 0.3 per cent in February.
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On an annual basis, sales volumes were 0.8 per cent higher in February than in February last year and 0.2 per cent higher when volatile car sales are excluded.
Retail sales have been essentially flatlining from the middle of 2025, according to economist Eugene Kiernan, with the greatest pressure is being felt in “front-line” areas such as clothing, department stores, food and furniture, where volumes are down between 2 per cent and 3 per cent on an annual basis.
The Central Bank warned this week that a prolonged conflict in the Middle East could see inflation accelerate to 4.2 per cent, with growth in terms of modified domestic demand slowing to 2 per cent as households see their purchasing power squeezed.
Iran’s effective closure of the Strait of Hormuz has halted global shipments of oil and gas, triggering what the International Energy Agency has described as the largest ever disruption to oil supply.
Consumer sentiment here plunged in March with consumers fearing a more lasting economic and financial fallout from the US-Israeli attack on Iran. The latest Credit Union Consumer Sentiment index fell to 56.7, well down on the 65.2 level recorded in February.
The fall in sentiment was reflected elsewhere in Europe with the EU Commission noting that consumer confidence in the euro zone “plummeted” in March.
The economic repercussions of the war are beginning to reflect in data that showed private sector growth in Europe slowed sharply in March.
Worries about a potential surge in inflation have lifted bets for an interest rate hike by the European Central Bank in April to 71 per cent, according to LSEG-compiled data, up from pricing for no rate hikes for most of the year before the war started.
Retail sales data in the UK, also released on Friday, showed sales fell in February after the strongest growth in a year and a half in January. Again the figures were taken before the Iran war’s impact started to bite.
Sales volumes slipped by 0.4 per cent over the month less than the 0.7 per cent forecast in a Reuters poll of economists – after upwardly revised growth of 2 per cent in January, the Office for National Statistics (ONS) said.
Annual sales growth was well ahead of the Irish figure at 2.5 per cent in February but that was a significant slowdown from 4.8 per cent in January, as unusually wet weather kept some shoppers at home, the ONS said, with monthly drops in purchases of automotive fuel, clothing, food and household goods. – Additional reporting Reuters
