Business Irish

Wednesday 21 August 2019

Shoppers spend less as wet weather and Brexit worries dampen the mood

Rainy weather last month was blamed for a spending slump. Photo: Colin O'Riordan
Rainy weather last month was blamed for a spending slump. Photo: Colin O'Riordan

Shawn Pogatchnik

Spending by Irish shoppers both in shops and online is at its lowest point for the past five years, with nerves over Brexit and soggy summer weather being blamed.

Visa's Irish Consumer Spending Index, produced by IHS Markit, found that the total value of purchases - including use of cash, cheques and electronic transactions - declined in June by 2.6pc versus a year ago. That is the sharpest drop since IHS Markit began compiling these monthly reports in 2014.

Philip Konopik, Ireland manager for Visa, called the figures "a cause of concern, as both face-to-face and e-commerce registered declines in consumer spending".

Retail Ireland, the Ibec body representing operators of 3,000 retail outlets across Ireland, said the comparatively weak June reflected two issues: sunshine and Brexit.

While the sun blazed last summer, it was in short supply last month. The UK's Conservative Party leadership contest and warnings of a possible hard Brexit have depressed shopping sentiment, too.

"A 2.6pc decline does look significant. But when comparing recent spending with June 2018, we've got to be conscious of the terrific summer weather we had then," said Retail Ireland director Thomas Burke.

"Prolonged hot weather drove footfall, so we're coming off an artificial high. That accounts for the decline.

"There's also a bit of softness in consumer sentiment at present that we can attribute, at least in part, to Brexit," Mr Burke said.

"The increase in public discussion of Brexit in the last couple of weeks has resonated strongly with consumers. It reins in spending when we see a spike in Brexit discussion."

The monthly report also recorded its first quarterly decline in its five-year history.

Spending in the April-June quarter fell 0.9pc versus the January-March period.

While IHS Markit's monthly reports often show spending in shops struggling to record growth, this usually is offset by stronger spending online.

But in June, online spending also recorded an 0.5pc drop from May - its first decline since October 2017.

Shoppers spent less in June in most sectors measured. Clothing and footwear declined by 5.5pc, food and drink by 2.5pc and transport and communication by 3.7pc.

Face-to-face spending declined for the second straight month in June, down 3.7pc from a year ago, its sharpest drop since February.

Purchases did not fall in every sector, however. Spending rose 5.1pc at hotels, restaurants and bars.

Irish Independent

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