Consumer spending falls for 39th consecutive month

OVER the past year people have been spending significantly less at bars, on petrol and clothes.

The volume of retail sales are down by almost a quarter since 2007 and have fallen by 2.1% in the last year. Last month alone they were down 1.3% compared with the previous month.

According to the Central Statistics Office (CSO), if the strong sale of cars are excluded, the volume of sales fell by 5.1% last month compared to May last year and by 0.6% compared to the previous month.

The decline has sparked concern about the future of the industry among retail groups and analysts.

Davy economist, Conall Mac Coille said Irish households continue to struggle with weak nominal pay growth, higher inflation and uncertainty surrounding employment prospects. Figures released yesterday show unemployment rose to 14.2% in June from 14.1% in May.

Chief executive of Retail Excellence Ireland David Fitzsimons said the figures illustrate just how difficult trading conditions are for retailers in Ireland.

May was the 39th consecutive month of declining sales for the retail industry.

“This simply dire retail industry performance is a clear indication of the urgent Government intervention required to reduce retail industry costs.

“Increased consumer spending will not return in the short-term, hence retail operators will only survive and recover through aggressive cost rationalisation,” he said.

In the last year the sale of petrol is down almost 10%, while bar sales fell just over 8%. The sale of clothing and footwear is down 7.8%, while food, drink and tobacco sales are down 4.3%. Car sales are up 13% in the year and increased by 7.4% last month.

Chambers Ireland said the sales decline is “very worrying” adding urgent action is needed to prevent more retailers closing and job losses.

Chair of the chief executive network forum, Tony Lambert said the Government must prioritise this sector to ensure that more retailers stay open.

“Otherwise this could have a potentially severe knock-on effect for local businesses and their employees.”

Small business group, ISME said the Government should establish a Retail Strategy Group to address the issues impacting on the sector, particularly the rising costs to business.