RETAILERS FACE an anxious run-up to Christmas as consumers failed to get into spending mode in October. Core retail sales declined 0.2 per cent compared to September, according to the Central Statistics Office.
Small business group Isme said the retail sector was now “hanging on by a thread” after the CSO published the figures. They show core sales, which exclude cars, are running 3.6 per cent down on last October. Even when cars are included, the monthly rise in sales volumes in October came to just 0.1 per cent, though they are still down 3.8 per cent annually.
In value terms, sales are running 3.7 per cent below the same period last year.
The bounce in consumer sentiment in October, described as “suspicious” by the economists behind the index, was not reflected in any major uplift in spending.
It was a tough month for department stores, with sales declining 1.9 per cent on September and 8 per cent compared to October 2010.
There was little evidence of autumn cheer in Ireland’s bars either, with sales down 3 per cent monthly and 10.3 per cent on an annual basis. Ulster Bank economist Simon Barry described October as “a particularly weak month for the pub trade”.
However, the weakest of the CSO retail sub-sectors was books, newspapers and stationery, where sales fell 2.8 per cent on a monthly basis and 14.4 per cent annually.
Mr Barry said there was “poor underlying momentum” and “broad-based weakness” in the figures that pointed towards continued heartache for retailers in the months ahead.
Chambers Ireland suggested the subdued nature of retail sales meant it was “highly unlikely” that the Government would reach its revenue targets of €670 million from the planned two percentage point increase in the top rate of VAT. “Government needs a more realistic approach to analysing the impact of mooted tax changes such as VAT,” said Chambers chief executive Ian Talbot.
In its pre-budget submission Retail Ireland has implored the Government not to add to the VAT burden by increasing excise duty.
As well as the negative impact of the VAT rise, car sales are also expected to fall in 2012 due to the absence of a scrappage scheme.
Alan McQuaid, economist at stockbrokers Bloxham, said the Government’s prioritisation of the export sector over the domestic economy could not bring about a recovery in the Irish economy alone. “If the economy is to regain significant traction over the next few years, weaning consumers off their savings and getting them back into the shops again and into spending mode is essential.”
