Shoppers regain spending appetite

David Clerkin

The Central Statistics Office (CSO) said yesterday that retail sales in June were 3.4% higher than the same month last year, when measured in volume terms. Sales were worth 4.4% more in value terms.

The figures were healthier when the effect of new cars was stripped out, as sales volumes were 4.4% higher and values ahead by 6.1%.

Goodbody Stockbrokers economist Dermot O’Leary said the latest figures showed sales growth levels were running significantly ahead of last year’s levels. Sales were 5.2% ahead on average in the first six months of 2005, which compared favourably with the 3% average recorded during all of 2004.

“Consumers are making their presence particularly felt on the High Street,” said Mr O’Leary.

Sales of textiles and clothing were ahead by 8.3% year-on-year, while footwear and leather sales were 4.4% stronger.

This was down to competition in the high street that drove prices down and had “an obvious impact” on consumer spending patterns, said Mr O’Leary.

There was bad news for the country’s publicans as sales volumes for the six months were 2.7% lower year-on-year, but Mr O’Leary said there were signs of a tentative improvement as monthly volumes bounced back in May and June.

“The favourable weather was likely to have the effect of enticing those affected by the imposition of the smoking ban back to the premises in the month of June. Price-sensitive consumers are also likely to be responding to more moderate increases in licensed premises in the past year,” he said.

But the figures also showed the Irish economy was “still somewhat short of a boom”, according to IIB Bank economist Austin Hughes. Mr Hughes said the increases in sales were consistent with an improvement in consumer sentiment but warned that sentiment took a sharp dive in July, which had not yet been picked up by official data.

He added that rising energy costs were likely to hit spending power in the months ahead and that consumer spending growth could slow down as a result.