Scrappage scheme drives retail sales up 6%

THE car scrappage scheme has prised open consumers’ wallets to push retail sales up by 6% in a year, as new car sales surged 35.4%.

Retail sales volumes increased by 6.0% in April 2010 compared to April 2009, according to the Central Statistics Office. There was a monthly increase of 1.8%. However, if “motor trades” are excluded the volume of retail sales increased by just 0.3% in April 2010 compared to April 2009 and the monthly change was -0.2%.

The good news for retailers is that this is the first year-on-year increase in the volume of retail sales (excluding motor trades) since March 2008.

Price cuts by garages resulted in the value of car sales increasing by 30%, with actual volumes increasing by 35.4%. Sales volumes at department stores climbed 8% in the year and sales of electrical goods rose 5.2%.

Fuel sales fell 10% but increased by 5.8% in value as oil prices rose and the value of the euro fell.

The cash take from retail sales also increased year-on-year by 1.6% as continued deflation reduced the prices retailers charged for goods. Public houses fared worst in cash terms with drink sales down 12.4%, but down 9.6% in volume terms.

Bloxham Stockbrokers chief economist Alan McQuaid said the increase in sales volumes is a further indication that things are improving on the economic front.

“Although we still have some way to go on the road to recovery, the risks in our view are now clearly tilted to the upside, notwithstanding the current eurozone “debt” crisis which has embroiled Euroland’s “peripheral” countries, including Ireland. Indeed, all the indications are now that both consumer spending and GDP will post positive annual changes for 2010 as a whole,” he said.

Austin Hughes, chief economist at KBC’s Groep NV’s Irish unit said: “The fear is fading. There is a turnaround, but it will be slow and patchy.”

Ulster Bank chief economist Simon Barry said their overall take on these latest numbers is that they are consistent with ongoing, if modest, improvement in underlying consumer spending trends.

“This is a pattern that has its origins in a gradual improvement in consumer confidence, which in turn is translating into less precautionary saving among Irish households as they sense the overall economic environment is beginning to show improvement,” he said.

Goodbody economist Deirdre Ryan said the data feeds into their view of continuing recovery in the consumer spending area of the economy.

“With consumer confidence sitting at two-and-a-half-year highs, the background to consumer spending has stabilised somewhat”