Consumer spending down 21% since 2007 peak

Consumer spending has fallen by 21% in cash terms since hitting a peak in 2007, the latest data from the Central Statistics Office indicates.

Retail sales volumes fell by 1.5% in Apr 2012 from Mar 2012, with a year-on-year decrease of 2.7%. In price terms, sales fell by 1.1% in Apr 2012 and were down 1.8% year-on-year.

Commenting on the results, Goodbody Stockbrokers chief economist Dermot O’Leary said the weakness in April has meant that both the volume and value of sales (excluding the motor trade) has fallen to another new low.

“In volume terms, core sales have fallen by 17% since their Dec 2007 peak, taking them back to Jan 2005 levels.

“In price terms, sales have fallen by 21% since their peak. The bottom line is that consumer confidence remains fragile in Ireland and while there may be a weather-related bounce in May, sales will continue to fall into next year in our view,” he added.

Davy’s David McNamara said yesterday’s poor data reinforces their view that consumer spending will decline by 1.7% this year, given weak nominal pay and employment growth.

Reacting to what he described as the “shocking” falls in sales, ISME chief executive Mark Fielding said poor sales figures are costing jobs and leading to shop closures.

“Consumer sentiment is weak and the outlook continues to remain uncertain. The high cost of rents, rates, tax and labour are causing retailers real difficulties and depressing consumer demand.

“Action is needed on all these fronts and the Government must recognise the valuable contribution that retail makes to the economy and address the current negative trend in sales, together with the high costs imposed on retailers.”

He said that more than three quarters of retailers say the very viability of their business is under threat, with a third of them expecting to reduce staff in the next year.

Retail Ireland director Stephen Lynam said: “These figures are very disappointing, but not surprising.

“Figures are down across almost every category, except for electrical goods, which may be benefiting from consumers buying new television sets in time for the European championships.

“The cold weather last month did nothing for sales of hardware, including garden furniture and equipment. The drop in clothing and footwear also indicates people held off on purchasing new summer outfits.”


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