Retail sales volumes declined 17.9 per cent in the year to March, according to data released this morning by the Central Statistics Office (CSO).
There was a monthly increase of 1.3 per cent, the second consecutive monthly rise. A sharp decline in car sales was the main reason for the annual drop in retail sales.
Car sales showed a marginal increase in March, rising 8 per cent on sales for February although they remain down 46 per cent compared with the same month last year.
If these are excluded the annual decline was 8.2 per cent and the monthly change was a fall of 2.2 per cent.
Over the first quarter the volume of retail sales dropped 21.6 per cent compared with the same period last year, although this drops to 7.8 per cent of car sales are excluded.
According to the CSO these are the largest quarterly changes on record.
Alan McQuaid, chief economist with Bloxhams stockbrokers, said while retail sales remained on a downward trend there was evidence that the worst may be over.
He said high street spending have been holding up reasonably well while car sales were collapsing.
However the March data suggests this trend may be reversing as car sales rose.
“Price reductions have kept core retail sales solid in recent months, so while core sales were down in March, persistent deflation should boost sales going forward.”
“Furthermore, with supermarkets now engaged in price wars and retailers starting to pass on the cost benefits from sterling’s weakness, this trend looks set to continue over the coming months,” he said.
Mr McQuaid said pharmaceuticals and medical supplies were the only retail business sector that grew in volume terms in 2008.
In February the CSO reweighted its retail sales data with a new base year of 2005. This process is carried out every five years to reflect changes in the purchasing patterns so that the index is kept up to date.
Weak retail sales lead to lower revenues for the Exchequer through lower VRT and excise duties.
The fallout of the property market collapse has led to sales of sales of furniture and lighting falling in recent months. Despite a brief rise in February this category reported annual decrease of 28 per cent while sales of hardware, paints and glass rose 1.9 per cent in the month but remain down 11 per cent over the year.
Pub sales too improved in March, rising 2 per cent although they remain down 9.4 per cent in volume terms over the year. The value of pub sales rose 1.5 per cent in March bringing the annual decline to 6.8 per cent.
Sales of books, newspapers and stationary also improved slightly in March, rising 0.6 per cent that month, but remain down 13.7 per cent.
Food sale volumes dropped 2.9 per cent in March and are 8.6 per cent lower than the same month in 2008.
Fine Gael’s enterprise spokesman Leo Varadkar said the continuing decline in retail sales “shows that small businesses are being hammered by Government policies which are depressing consumer demand and forcing up business costs.”
“Not only has consumer confidence been destroyed by the Fianna Fáil Government, it is rapidly destroying the economy’s vital small business base.”
