THE SLOWDOWN in retail sales has accelerated sharply, driven by a collapse in the market for new cars, according to figures published yesterday.
Sales slumped 20.4 per cent in the year to January, the most dramatic slide since the Central Statistics Office (CSO) started collating data. This is the biggest decline since records began in 1974. In the month of January retail sales declined 9.4 per cent.
The main reason for the record decline was a 42.2 per cent drop in the number of new cars sold in January compared with the same month in 2008.
Car sales data collected by the CSO includes petrol and other items sold on garage forecourts.
Figures from the Society of the Irish Motor Industry indicate new car sales fell 67 per cent in annual terms in January and by 63 per cent in February. If the impact of car sales is excluded the retail sales decline was 8.1 per cent in the year to January and 0.1 per cent lower in the month.
Weak retail sales result in reduced tax revenues for the exchequer through lower taxes and excise duties and the data comes as the Government is framing its supplementary budget to be delivered on April 7th.
VAT receipts, the category of tax driven by consumer spending and the housing market, were 17 per cent lower in the first two months of this year than the same period in 2008.
Rossa White, senior economist with Davy stockbrokers, said the decline in car sales was unsurprising as this was usually a discretionary purchase. He noted there may be contributory factors behind the fall in car sales including difficulties securing financing and the glut of second-hand cars on the market.
Economists believe retail sales are likely to remain weak this year as the benefit of lower interest rates on mortgage repayments are offset by negative impacts such as declining employment, stagnant or falling pay levels and a rise in taxes in next month’s budget.
When retail sales are measured by value the decrease over the 12 months to January was 19.9 per cent again the sharpest on record.
The fallout of the property market collapse was evident in a number of retail categories, particularly sales of furniture and lighting which were more a third lower than a year ago, and hardware, paints and glass products which dropped 21.7 per cent.
