Annual retail sales decline by 0.7%

The volume of retail sales fell by 0.7 per cent year-on-year in February 2011, but rose 3.2 per cent when compared to January, new data showed today.

The volatile motor trade continued to be a large contributor to the figures, rising 5.3 per cent year on year.

Excluding this sector saw the annual fall in retail sales widen to 3.2 per cent, while the monthly rise was turned to a 0.3 per cent decline.

Davy analyst Conall MacCoille said the decline was not a surprise

"Today's release suggests that the January data reflected a weather-related rebound and that the outlook for consumer spending remains weak," he wrote in a note. "The decline in retail sales is not surprising given the decline in consumer confidence through the second half of 2010, the fiscal retrenchment and the continued fall in employment."

Other areas that showed a yearly increase were non-specialised stores, where sales volume climbed 0.5 per cent, while clothing, footwear and textiles increased by 0.7 per cent.

However, this was partially offset by declines in the volume of pharmaceuticals, medical and cosmetic articles sold, which fell by 7 per cent compared to February 2010. Fuel declined by 8 per cent year on year, while sales of furniture and lighting was down 12.9 per cent.

The value of retail sales fell 0.3 per cent year-on-year, while the monthly change showed a rise of 1 per cent. When the motor trade is excluded the annual decrease widened to 1.9 per cent.

On a monthly basis, sales were down 0.8 per cent.

National Irish Bank's chief economist Dr Ronnie O'Toole said sales remained "very subdued" as the weak economy and the austerity measures taken in December's budget weigh on households.

Retail sales are now back to levels last seen in late 2005, he said, and the return of inflation is only serving to increase the pressure on households, although retail inflation here remains subdued compared to other European countries.

"Rising interest rates will also sour sentiment," he said. "The first rate increase is expected to be announced at the ECB's next meeting on Thursday next week, despite the uncertainty caused by 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."