Decline in retail sales reflects acute weakness in consumer demand

RETAIL SALES declined in April, according to new data from the Central Statistics Office released yesterday.

The seasonally adjusted value of core retail sales, which excludes the volatile motor trade, was down 0.3 per cent compared to March.

By volume, the monthly decline in core retail sales was 1 per cent. This difference between value and volume is accounted for by the return of consumer price inflation.

The underlying trend (see chart) reflects continued acute weakness in consumer demand owing to a range of factors including a flagging labour market, tax increases, the paying down of high debt levels and the limited availability of credit.

“Today’s decline in retail sales indicates that consumer spending remains weak going into the second quarter,” said Davy Stockbroker analyst Conall Mac Coille.

“The contraction in retail sales is not necessarily surprising given the poor state of consumer confidence and the negative impact on real incomes from the fiscal adjustment,” he added.

On a yearly basis, fuel, furniture and pharmaceuticals were among the categories that saw the sharpest decline.

The volume of fuel sales was down almost 12 per cent, while furniture and lighting sales declined by 16.2 per cent. Pharmaceuticals, medical and cosmetic articles saw sales slump 7.4 per cent.

By contrast, clothing and footwear sales rose by 1.6 per cent compared to April 2010, and department store sales increased by 1.4 per cent.

In all, only three categories showed any growth, while 10 contracted.

Goodbody stockbrokers said that the data indicated car sales were beginning to weaken ahead of the end of the scrappage scheme.

“While car sales were able to pull overall sales higher over the last 18 months given the relative size of the industry in overall sales, this trend is now likely to reverse,” chief economist Dermot O’Leary said.

Business groups called for action to be taken to help support the struggling retail sector.

Chambers Ireland said that talk of changes to Sunday premium payments and Joint Labour Committees was “a step in the right direction” but more needed to happen at a local level.

“The continued drop in retail sales is of great concern. Both central Government and local authorities must work together to introduce measures to help retailers survive,” chief executive Ian Talbot said.