Shoppers keeping their purses shut tight
CONSUMERS stung by December's Budget continue to shy away from the shops, the latest retail sales statistics show.
The volume of retail sales is now back to levels last seen in 2005, with some of the biggest drops recorded in sectors like furniture and lighting, fuel, and cosmetics. In contrast, the volatile motor trade and clothing sectors were more buoyant.
Overall, retail sales are down 3.2pc year on year compared with last February, the Central Statistics Office said yesterday.
The fall in sales figures in February comes after a rebound in January. There was also a sharp fall in December.
Unemployment levels and inflation, driven by higher fuel prices, are also having a significant impact on consumers.
While retail prices fell almost 10pc between 2008 and 2010, cushioning the fall in take-home pay suffered by most households, price levels have risen by almost 1pc since last summer, driven by higher oil prices.
Economists said yesterday that consumer sentiment remained weak and was expected to fall further, with anticipation of a European interest rate hike as early as next week.
They warned that retail sales were unlikely to improve for the foreseeable future.
"Despite the tragic events in Japan, the ECB will continue to tighten monetary policy gradually over the coming 12 months in order to keep a lid on rising European inflation," Ronnie O'Toole, chief economist at National Irish Bank, said.
"Inflation is squeezing household spending power, and rising interest rates will also sour sentiment."
Retail sales were doing all right in the first half of 2010, but when the size of the cuts in the Budget became obvious and the bailout plan was announced it really impacted on the sector and people pulled back, Mr O'Toole added.