Annual retail sales fall 17% to April

Retail sales volumes fell by 17 per cent in the year to April, according to the Central Statistics Office (CSO).

This compares to an annual decrease of 17.7 per cent in March and reflects a monthly rise of 2.3 per cent in April.

The primary reason for the decline over the last 12 months was a 50 per cent drop in the volume of new car sales, according to the preliminary figures.

If car sales are excluded, the volume of retail sales was 7.1 per cent lower in April and up 0.5 per cent in the month. The value of retail sales dropped 20.5 per cent in the year to April but rose by 2 per cent in the month.

The data was taken before higher taxes and levies introduced in the April Budget had impacted on most consumers’ pay packets.

Lynsey Clemenger, economist with Ulster Bank, said the main reason for the rise in retail sales was primarily driven by the 4.2 per cent rise in food sales, a category which represents over a third of the index.

She said the first quarter was likely to be the low point in terms of retail sales but added that consumer spending was likely to remain subdued for the remainder of the year.

“Incorporating budgetary measures, we continue to forecast a fall in retail sales in the region of 12 to 14 per cent in 2009. Based on the assumption that spending on services will hold up better, we forecast an 8.5 per cent fall in consumer spending in 2009,” she said.

Alan McQuaid, economist with Bloxhams Stockbrokers, said despite the downward trend in retail sales, “the worst may be over”.

He said persistent deflation would boost sales over the coming months aided by the price wars between supermarkets.

However, he warned Government policies may “choke off any competitive advantages that Ireland has through over taxation” and noted that the increase in income levies were already offsetting much of the gains in disposable income.

Mr McQuaid said the Government needs to come up with a more ambitious plan than “just taxing the PAYE worker.”

Leo Varadkar, Fine Gael enterprise, trade and employment spokesman said the Government needed to seek to reduce energy costs and reverse last year’s VAT increase to support the sector.

David Fitzsimons, chief executive of Retail Excellence Ireland, believes the 7.1 per cent decline in retail sales excluding the motor sector is a “significant understatement”.

The representative group of around a third of Irish-based retailers also said he expected data for May and June to be “aggressively negative” due to the impact of tax and levy increases introduced in the April Budget.

“Our view is that we are going to see like-for-like declines in retail sales up until the second quarter of 2010”.

According to Mr Fitzsimons expects the loss of the equivalent of 38,000 retail jobs by the end of the year, bringing the total for 2009 to 50,000.

“Some of this is being disguised by a shift to part-time work or a three-day week but the job losses are huge and it is all about the lack of consumer confidence.”

Deirdre Ryan, economist with Goodbody Stockbrokers, said once the distorting effect of car sales is removed the retail sales - after consecutive monthly declines - actually grew by a modest 0.5 per cent month on month in April”.

The impact of the housing slump can be seen from a 38 per cent drop in annual sales volumes for furniture and lighting products and a 17.7 per cent decline in hardware, paints and glass products.

Sales in department stores rose 1.3 per cent in April while bar sales were down 5.2 per cent in the month to bring the annual decline to 12.1 per cent.

Separate car licencing data released by the CSO today show there were 4,480 new private cars licensed in May, down over 60 per cent on the same month last year.