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Festive shoppers hike sales by 3pc for retailers

Christmas shoppers helped boost retail sales by 3pc in December.

However, the strong end to the year shouldn't raise hopes too much -- as many retailers were facing "armageddon" thanks to VAT hikes and low confidence, the Irish Small and Medium Enterprises Association warned yesterday.

Sales were up 2.1pc in December compared to the previous month and were 3pc higher than a year earlier, Central Statistics Office figures show.

Analysts cautioned though that the big freeze at the end of 2010 had put shoppers off then, meaning the improvement wasn't as great as it seemed.

Motor sales were up 51pc on the previous December, although this would be from a very low base as very few cars are purchased at the end of the year.

Department stores had a good month with sales 8pc higher than in November, while fuel sales were up 5pc in the year, electrical goods rose 9pc, furniture sales rose 4.6pc, clothes were up 3.6pc and food businesses were up 1.1pc.

However, hardware, medicines, newspapers, books and bar sales all fell.

Retail sales for the year as a whole fell by 0.9pc in volume during 2011 and were down 0.7pc in value according to preliminary CSO estimates.

Retail Excellence Ireland (REI) said that when car sales were excluded, retail sales were up by 1pc in December, the first like-for-like improvement in 45 months.

"This year looks set to be as challenging as recent years have been for retailers. Consumer confidence remains at record lows. The effects of the 2pc rise in VAT will act as a weight around the neck of the industry in 2012," said REI chief executive David Fitzsimons.

There was little to be optimistic about on consumer spending as you would have expected such an increase over Christmas, said Bloxham stockbrokers economist Alan McQuaid.

The ending of the scrappage scheme last July to encourage car sales would make life tough for the motor industry in 2012 as it was noticeable that car sales in the second half of 2011 were down 25pc whereas they had risen by 13pc in the first half of the year when the incentive was in place.

"The bottom line is that consumers remain under immense pressure with stealth taxes announced in the December Budget further set to eat into disposable income," he said.

Irish Independent