Retail sales rose by 8.1 per cent in the 12 months to May, driven by strong increases in sales of hardware, books and clothes. However there are fears that the impact of Brexit and the return of cross border trading due to the slump in sterling will slow sales growth.
According to figures published by the Central Statistics Office on Tuesday, retail sales rose by 0.7 per cent in May, compared with April. When volatile car sales are excluded, retail sales actually rose by 1.2 per cent in the month of May, but by 6.5 per cent in the year to May.
Headline retail sales volumes have now increased by 30.2 per cent from the January 2010 trough, according to Philip O'Sullivan, economist with Investec, and are now back to within 3.3 per cent of the peak of January 2008.
Alan McQuaid, economist with Merrion Capital, expects personal spending to continue to rise in 2016, buoyed by ultra low deposit-interest rates and increased disposable income.
“Even allowing for a slowdown in spending in the second half of 2016, we think that headline retail sales volume growth for the year as a whole will be in the region of 7.0 per cent as against 8.2 per cent in 2015,” he said.
Hardware, paints & glass saw the strongest month-on-month increase of 14.3 per cent, followed by books, newspapers and stationery (+10.1%) and clothing, footwear & textiles (+9.7%).
On the other hand, the sectors with the largest monthly decreases were electrical goods, which fell by 1.9 per cent, motor trades (-1.6%) and food beverages & tobacco (-1.2%).
However while Mr O’Sullivan said that the figures were “encouraging”, he added the caveat that it remains to be seen what, if any, impact the EU referendum in the UK will have on consumer sentiment in Ireland.
He’s not alone. Retailers have also cautioned that the strong momentum shown in May should not be taken for granted and that Brexit poses a threat to continued growth remain.
“The UK’s decision to leave the European Union will have both short term and long term consequences for retail trade in Ireland,”Retail Ireland director Thomas Burke said, noting that we will likely see the return of cross border trade, driven by the devaluation of sterling against the euro.
“The other major concern in the short term is the impact this political and economic uncertainty may have on consumer sentiment,” Mr Burke said.
