Weak sterling continues to dampen Irish retail and new car sales

Isme calls for support for sector amid rise in cross-border shopping and used car imports

Retail sales continue to be dampened by the weakness in sterling, which has triggered a fall-off in new car sales here and a corresponding spike in used car imports from the UK.

The latest figures from the Central Statistics Office (CSO) show the volume of retail sales grew by 4.7 per cent in the 12 months to August.

However, when car sales are excluded, the annual increase was 6.7 per cent. On a monthly basis, the volume of sales actually declined by 4.2 per cent in August, but rose by 0.2 per cent when car sales are excluded.

The sectors with the largest monthly volume increases were pharmaceuticals, medical and cosmetic articles (+2.4 per cent), hardware, paints and glass (+2.1 per cent).

The sectors with the largest month-on-month volume decreases, meanwhile, were clothing, footwear and textiles (-0.7 per cent), books, newspapers and stationery (-0.7 per cent).

The figures also show there was a decrease of 0.4 per cent in the value of retail sales in August when compared with the previous month, and there was an annual increase of 2.6 per cent.

Strategic supports

The Irish Small & Medium Enterprises Association (Isme) called on the Government to provide strategic supports for the retail sector, such as a reduction in the VAT rate from 23 per cent to 21 per cent .

Isme chief executive Neil McDonnell said: “The retail sector is at the mercy of consumer sentiment.

“The most recent index shows a slight pull-back in Irish consumer sentiment, dropping from 105.1 to 102.9 in August. This decline is reflected in today’s monthly retail sales index.”

Mr McDonnell said sterling’s weakness and the uptick in cross-Border shopping had heaped pressure on the sector.

Excessive business costs such as insurance, rates and development charges were other issues facing retailers, he said.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times