Car scrappage scheme drives rise in retail sales figure

RETAIL SALES rose in June, with the motor trade continuing to sway the overall figures.

The volume of total retail sales for the month was 1.1 per cent higher than in May, and 0.2 per cent higher when compared with the same month a year earlier, according to figures released yesterday by the Central Statistics Office.

Over the year, the car trade showed one of the largest increases, gaining 21.9 per cent as the Government’s car scrappage scheme, which was extended for six months to the end of June, lifted sales.

When volatile car sales were excluded, the volume of retail sales declined by 0.1 per cent in the month and by 4.2 per cent compared to June 2010.

When measured by value, however, core retail sales declined by less compared to last year, reflecting rising consumer prices.

Sales of electrical goods increased by 5.2 per cent year on year, and furniture and lighting were up 2.6 per cent.

However, the volume of fuel sales fell by 12 per cent, hardware paints and glass declined by 10.4 per cent, and other retail sales were 8.1 per cent lower.

Retail Excellence Ireland said the figures showed volatile sales levels continued while consumer confidence remained weak.

Provisional estimates for the second quarter of the year indicate the volume of retail sales fell by 1.7 per cent compared to the same period in 2010. However, sales rose by 1.8 per cent compared to the preceding quarter.

Analysts warned that consumer sentiment would likely remain weak in 2011.

“Despite the temporary uplift and morale boost from the recent visits to Ireland by Queen Elizabeth II and US president Barack Obama, consumer sentiment fell back in June and should remain fairly weak over the rest of the year as households continue to grapple with high levels of personal indebtedness and the erosion of disposable incomes arising from fiscal consolidation measures, increasing interest rates and weak labour market conditions,” said Bloxham chief economist Alan McQuaid.

“With not much scope for a significant drop in the savings rate, consumer spending is likely to maintain the downward trend of recent years with declining real disposable incomes being the main driver. All in all, personal spending on goods and services is expected to fall in real terms for the fourth year running in 2011.”

Irish Small Medium Enterprises Association Isme has called for the Government to introduce a retail strategy group immediately, as part of an attempt to halt the fall in retail sales.

Chief executive Mark Fielding said the sector was in “meltdown”, with retail sales consistently falling since 2007.