Contracting retail sales in June due to falling motor trade, figures show

THE DECLINE in retail sales accelerated sharply in June, although this deterioration was largely accounted for by falling motor sales.

Figures released yesterday by the Central Statistics Office showed that the volume of retail sales contracted by 5.5 per cent in June when compared with the same month a year earlier.

This was significantly greater than the 2 per cent dip in year-on-year sales recorded in May, and it represented the biggest annual fall since December 2009.

However when motor trade was stripped out, “core” retail sales volumes fell 1.7 per cent in June on an annualised basis.

Sales of food, beverage and tobacco underwent the sharpest decline, with volumes decreasing by almost 10 per cent month-on-month. This followed a 6.9 per cent rise in May.

John O’Reilly of Davy stockbrokers described the June food sales data as “baffling”.

“The erratic monthly behaviour by consumers, even in the context of a trend decline, must be a nightmare for both suppliers and retailers,” Mr O’Reilly said.

Sales of hardware, paints and glass were also under pressure in June, falling almost 5 per cent month-on-month.

Electrical goods, on the other hand, saw a monthly increase of about 3 per cent in sales volumes.This brought the annualised increase in volumes to 12.5 per cent in June.

However Ulster Bank economist Simon Barry noted that this strong volume growth “exaggerates” the health of this area somewhat because of the high level of price deflation in such goods.

He also said a “Euro 2012 effect” may have caused a temporary spike in recent electrical sales as football fans splashed out on new TVs ahead of the tournament.

Alan McQuaid, economist at Merrion Stockbrokers, described yesterday’s retail sales figures as very disappointing and said it was hard to foresee a major rise in spending in the coming months, given the current uncertain climate.

“The bottom line is that consumers remain under immense pressure, with stealth taxes announced in the December budget further set to eat into disposable income,” Mr McQuaid said.

“Lower interest rates will ease the pain to some degree but not enough to put spending back in the black. Stronger sterling, too, may discourage consumers going up to Northern Ireland to do their shopping.”

He predicted that personal spending on goods and services would fall 2 per cent in real terms this year.