THE price of electrical items is down by a third from their peak, while clothing costs have fallen by close to a quarter.
Analysis of retail prices by stockbroking firm Davy found that despite a well-publicised price war prices at supermarkets are down just 6.5% since the middle of 2007.
Furniture and lighting prices are down 26%, items at department stores have been slashed by 21% and discretionary goods such as jewellery, toys and mobile phones have seen price cuts of 19%, according to the analysis.
Davy’s Rossa White said that price discounting has been necessitated by the dramatic drop in demand but it was helped by the strong euro and decline in wholesale prices for some goods.
“We reckon that many retailers, especially some of the larger foreign-owned chains entered the recession with fat margins. But those margins have slimmed down, and rents and wages are likely to come under further pressure,” he said.
Davy’s analysis shows ongoing sharp price deflation at the majority of Irish retail outlets.
The stockbrokers created a synthetic price index by deflating the value of retail sales by the volume index, which it said allows it to compare prices more readily across categories of retail goods.
“Prices are still being slashed by retailers. In December, the owners of car showrooms, supermarkets and convenience food stores, department stores, petrol stations, pharmacies, clothes shops, furniture outlets, DIY stores, electrical goods shops, bookstores and bars all cut prices.
“Only specialised food shops, which account for 3% of all retail sales, raised their prices,” said Mr White.
Davy expects retail sales volume to bottom in the first quarter of this year and return to some modest growth in the second quarter.
“Precautionary savings may unwind somewhat as the peak in unemployment comes into sight and households realise that the public finances have stabilised.
“But the value of sales may keep slipping for a couple of quarters yet as retailers continue to cut prices,” said Mr White.
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