Lower-than-expected retail sales hit economic hopes

Retail sales came in much lower than expected, denting hopes that the economy is gaining strength.

According to the CSO, the volume of retail sales for March fell by 3.6% compared with the same month last year and there was a decrease of 1.9% compared with February. Excluding the motor trade, retail sales were down 1.8% compared with February and 1.6% on an annual basis.

The value of retail sales fell by 4.1% compared with Mar 2012 and 1.9% compared with February. Excluding the motor trade, there was a monthly decrease of 1.8% and an annual decrease of 1.7%.

Merrion Stockbroker economist Alan McQuaid said: “The main factor impacting on consumer demand has been the continued net decline in real disposable incomes, an increasing tax burden, and an erosion of transfer income.

“As well as that, the personal savings rate has remained elevated as households have striven to reduce their high level of indebtedness and to adjust to a sharp fall in personal wealth,” he said.

“That said, a gradual, albeit modest improvement in labour market conditions, should hopefully support an easing in the rate of decline in consumer spending this year, with the prospect of a slight rise in personal expenditure on goods and services in 2014 as the level of fiscal austerity recedes.”

The sectors that saw the biggest month-on-month increase were department stores, which were up 2.3%; food, beverage, and tobacco related stores, which were up 1.6%; and other retail sales were up 1.5%.

The sectors with the largest monthly decreases were books, newspapers, and stationery down 8.5% — and hardware, paints, and glass, down 5.6%.

“March was extremely cold and many consumers may have shunned the shops rather than brace the icy conditions,” Retail Ireland director Stephen Lynam said, adding that “consumers need hope and a reason to start spending”.