Retail sales volumes declined 20.9 per cent in the year to February, according to data released this morning by the Central Statistics Office (CSO).
The annual decline is the second sharpest decline in the reweighted index after last January, despite a monthly increase of 5.7 per cent, the CSO’s retail sales index showed. Retails sales in January fell 20.5 per cent compared with December.
A collapse in car sales is the primary reason for the annual collapse in car sales with volumes down 53.2 per cent year-on-year.
Usually in February car sales account for a third of retail sales.
If the impact of car sales is excluded, the value of retail sales was 6.7 per cent lower in the year to February and rose by 1.3 per cent in the month.
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 result in reduced tax revenues for the Exchequer through lower VRT and excise duties and today's data comes as the Government is framing its supplementary budget to be delivered on April 7th.
Figures published by the Department of Finance last month show that tax receipts in the first three months of the year were 23 per cent lower at €8.5 billion compared with the first quarter 2008.
The fallout of the property market collapse has led to sales of sales of furniture and lighting falling in recent months but in February this category reported an increase of 14.2 per cent while sales of hardware, paints and glass rose on a monthly basis of 6.1 per cent.
Sales volumes in department stores dropped 8.5 per cent between January and February while food, beverage and tobacco sales were 1.8 per cent lower in the month.
Bar sales declined 2.6 per cent in February and are 10.9 per cent lower in the year.
Torlach Denihan, director of IBEC group Retail Ireland said 2008 the fall in retail sales in 2008 had been the worst on record and “his negative trend is continuing into 2009”.
He said the impact of the two most recent Budgets would reduce consumer spending by an estimated 9 per cent and said 25,000 retail jobs would be lost this year.
Rossa White, chief economist with Davys, said the impact of the fall in car sales was distorting the retail sales data.
He said the core retail sales, excluding the impact of cars provides “is much more stable and provides the proper idea of trend”
He said price discounting was clearly apparent as shops cut prices to boost volumes.
Mr White suggested that the “worst declines in retail may have passed” but added that consumer spending may remain under pressure for the time being.
