Retail sales are down 3.6% on last year

IRISH consumers were less likely to dip into their wallets last month as the deterioration in the international economy heightened.

The volume of retail sales fell 0.4% last month to stand 3.6% lower on the year prior, according to figures from the CSO.

Taking out car sales, the volume of retail sales fell 3.7% in August from a year ago and dropped 0.5% month-on-month.

Chief economist with KBC Bank Austin Hughes said the figures were disappointing.

“They show that consumers remain pressurised by weak employment and income prospects and also by very low confidence.

“It’s a consistent enough story, the consumer is still reluctant to spend, partly because he’s unable and partly because he’s unwilling. It’s very difficult to see why there would be a turnaround, certainly the news on interest rates and oil prices is a bit better.

“But there are ongoing increases in electricity and gas bills and a general bad feeling among consumers particularly in the run-up to the budget that is likely to keep them from anything but necessary spending.”

Motor sales were down 0.6% last month but down 2.6% in the year as the scrappage scheme came to an end. Fuel sales were down 0.3% last month bringing the annual drop to 8.2%.

However sales at department stores were up 2.5% last month while clothing sales increased 0.8%.

The sales of electrical goods jumped 5.8%, but bars reported a month drop of almost 5%, bringing their annual decline to just over 7%.

Chief economist with Goodbody Stockbrokers, Dermot O’Leary, said:

“Sales both in volume and in value terms are continuing to fall to new lows and that indicates that there is still a very, very tough environment out there for retailers overall.

“Some relief may be on the way in terms of their costs rather than their revenue by way of legislation on rent reviews by the Government towards the end of this year but on the revenue side, I’d expect the consumer spending environment to remain tough.”

Small business group, ISME said that the Government must introduce the promised Retail Strategy Group, to address the concerns of the retail sector.

It said that if no action is taken, the number of retail outlets closing will increase, leaving many high streets resembling ghost towns.

Chambers Ireland also called on the Government to commit to not increasing the rate of VAT in the forthcoming budget.