Shopping remained in vogue in 2007, as retail sales grew by an average of 6.4 per cent. But despite some Christmas cheer among retailers, there was a slowdown in spending over the final quarter of the year, new figures from the Central Statistics Office (CSO) show. Laura Slatteryreports.
And consumers are expected to adopt more cautious spending habits in 2008, when there will be no cash boost from Special Savings Incentive Accounts (SSIAs).
The volume of retail sales, excluding the effect of inflation, increased by 4.7 per cent in December, compared to the same month the year before, while the value of sales, or the total actual takings, increased 6.8 per cent.
Propelled by large monthly increases in till receipts among department stores, electrical goods retailers and the food, beverages and tobacco category, retail sales rose 1.7 per cent in December compared to November, when they declined 0.6 per cent over the month.
The figures reflect the pattern published earlier in "footfall" statistics compiled by Experian, which had measured fewer people in stores and shopping malls in the early part of the Christmas gift-buying season compared to the year before, but a healthy thickening of the crowds in December.
The average growth of 6.4 per cent in volumes last year was the highest since growth in sales peaked at 11.9 per cent in 2000.
"We enter 2008 with sales holding up well," said Pat McArdle, chief economist at Ulster Bank.
The monthly gain in clothing and footwear sales in December was "modest enough" at 0.5 per cent, he added, but this compared to a decline in sales the previous December. This indicates that the large price reductions posted in the pre-Christmas sales successfully persuaded window shoppers to part with their cash.
However, sales of household equipment fell 1.4 per cent, according to the preliminary December figures, while sales of books, newspapers and stationery dropped 2.2 per cent.
"There has clearly been a cooling, which is not surprising against the backdrop of global events and deteriorating consumer confidence," Mr McArdle said.
Alan McQuaid, economist at stockbrokers Bloxham, said the expected slower rates of income and employment growth in 2008, coupled with "increasing uncertainty" about the Irish and global economic outlook, meant it was likely that consumers would adopt "a more cautious attitude".
But he said he still expected personal spending to increase by 3.75 per cent this year, or even higher if the European Central Bank cuts interest rates.
Employers' group Ibec said retail sales had proved "resilient", with sales of clothing and footwear and electrical goods achieving double-digit growth in the full year.
Excluding car sales, the retail sector grew by a "solid" 5.7 per cent.
Goodbody Stockbrokers said it was encouraging that spending on DIY items held up, despite the rapid slowdown in the housing market.
