Retail sales fall by 0.5% in July

Retail sales edged lower in July, putting the retail sector under further pressure.

The volume of total retail sales for the month was 0.5 per cent lower than in June, and 0.6 per cent lower when compared with the same month a year earlier, according to figures from the Central Statistics Office.

Over the year, the largest increases were recorded in the motor vehicle sector, which rose by 7.1 per cent.

The sector has has had a significant impact on sales in recent months as the Government's car scrappage scheme was extended for six months to the end of June.

Excluding car sales, the volume of retail sales rose by 0.5 per cent in the month and dipped by 2.3 per cent compared to July 2010.

Davy chief economist Conall Mac Coille said the decline in retail sales was concentrated in motor trades, which declined by 8.4 per cent compared with June.

"Motor trades had increased sharply in May and June as households brought forward spending to take advantage of the car scrappage scheme before it expired," he wrote in a note.

"The car scrappage scheme merely redistributed spending towards vehicle sales in the first half of 2011 rather than stimulating overall consumer spending. As we expected, spending in the broader retail sector has now picked up as motor trades have fallen back."

Goodbody's chief economist Dermot O'Leary said core retail sales showed more positive trends, with sales volumes showing their first increase since January. However, a tough consumer environment was still reflected in the figures.

"Volume trends outside of non-specialised stores highlight the still difficult consumer environment. For example, sales in the hardware, paints and glass category, a proxy for DIY sales fell by 6 per cent year on year in July, although this represents an improvement on the previous month," he said in a note.

The value of overall retail sales was 0.5 per cent lower in July when compared with the same month in 2010, and there was a month-on-month decline of 0.4 per cent.

When the car trade was removed from the figures, value fell by 1.2 per cent, year on year, and there was a monthly increase of 0.8 per cent.