Annual retail sales fall 9.1%

Retail sales continued to fall in October, slipping 9.1 per cent compared with the same month a year earlier.

On a monthly basis, the volume of sales fell 0.3 per cent compared to September 2009.

Excluding motor trades, the annual fall was 6.7 per cent, while the monthly change was -1.7 per cent.

The decline was seen acorss all sectors of the retail trade, with the largest annual declines seen in motors, which fell 24.1 per cent, and household equipment, which declined 11.7 per cent. Bars were also particularly hard hit by weakening sales, recording a 8.2 per cent dip in sales compared with October 2008.

In value terms, retail sales fell 13.9 per cent compared with a year earlier. Excluding the motor trade, the annual decrease was 12 per cent.

Retailers have been cutting prices in an attempt to stem the flow of shoppers crossing the border to pick up cheaper goods.

Deflation in Ireland was 5.7 per cent last month, compared with 6.6 per cent in October. Economists believe the rate at which prices are falling  has passed its steepest point.

Some impact is expected to be seen from the changes introduced in Budget 2010, including a reduction in excise duty on alcohol and a change in the VAT rate to 21 per cent.

Ulster Bank's Lynsey Clemenger described the figures as "disappointing".

"Whereas last month we had noted increasing signs of a stabilisation in underlying retail sales, these latest figures point to some renewed weakness in consumer spending. While, as ever, it is dangerous to read too much into one months' data, the extent of the deterioration in October has meant that the level of core retail sales is running below the third quarter average."

The bank said its forecasts for next year were cautious, an approach that the latest data confirmed. Ulster bank is predicting a fall in total consumer spending in the region of 2 per cent in 2010.

Bloxham analyst Alan McQuaid said the importance of car sales to the overall level of consumer spending could be seen in the figures.

"The critics would argue that money spent on the 'scrappage' scheme will go out of the country as Ireland imports all of its cars, but we would counter that by saying that the jobs lost in the motor trade from the slump in sales have been mainly Irish ones, and psychologically the lift given to consumers will be huge, especially come January if there is a clear sign on the roads of a big pick-up in new registrations," he wrote in a note.

He predicted the excise duty cut on alcohol, the scrappage scheme, and return to a rate of 21 per cent VAT would boost overall expenditure in 2010, although the reduction in public sector wages and social welfare allowances would have a negative impact.