Retailers take hit as families hoard money
HOUSEHOLDERS are hoarding their money, rather than spending it, as new figures show that retail sales took another hit in September.
As the full cost of Ireland's banking bailout became apparent, retail sales fell by 0.3pc ,compared to the same month last year. The amount of money spent dropped by 2.6pc.
The latest retail sales figures from the Central Statistics Office came as a disappointment yesterday. They showed that sales dipped across most categories in September, following a slight upward trend the previous month.
And this drop in business at stores was even more pronounced when car sales -- which are artificially boosted by the scrappage scheme -- are excluded. In that case, sales were down 2.5pc on 2009.
Instead of spending, households are saving at a furious rate, according to a further set of CSO figures, which reveal that consumers squirrelled away over €11bn last year -- three times as much as in 2008.
While people's disposable income fell by €2.1bn last year to €89.6bn, this went nowhere near covering the €10bn drop in consumption, which instead was overwhelmingly directed into savings.
Ulster Bank economist Lynsey Clemenger said the latest deterioration in retail spending was not surprising, given the sharp fall in consumer confidence in September.
"There is no disputing the fact that the overall picture remains one of clear weakness," she said.
"The consumer remains under a lot of pressure, with the weak state of the labour market playing a key role here."
Aidan Corcoran, a researcher at Davy Stockbrokers, said the coming Budget was "certain to hit consumer spending power next year and sentiment now".
He said the fact that the value of sales dropped even more than the volume, also showed that prices were still falling.
Bars saw a particularly big drop in customers, with sales down by 11.6pc compared to August 2009, while fuel sales were down 8.9pc -- probably reflecting the fact that fewer people were going to work.
Sales of furniture, hardware, books, newspapers and household equipment also fell year on year.
However some sectors saw a revival -- motor sales were up 13.2pc, department stores saw a 13.2pc rise and clothes, electrical goods and pharmacies all saw improved sales.
And food sales also rose by 0.5pc, although the value of these sales fell by 1.6pc, showing that supermarkets are still cutting prices.