Retail sales rose strongly in June, showing a monthly rise of 3.2 per cent, according to new figures from the Central Statistics Office. However they show that bar sales remain weak and are continuing to run well below 2003 levels, writes Cliff Taylor, Economics Editor.
The trend in retail sales has been volatile and the June increase follows monthly declines in April and May. The volume of sales - the total amount sold after adjusting for inflation - was 3.3 per cent higher in June than the same month last year. When the motor trade is excluded, the annual increase in the volume of retail sales in all other areas rises to 3.8 per cent.
Sales in department stores are running 5.3 per cent up in volume terms, driven by rising demand for clothing and footwear and for furniture and household goods. Reflecting the housing boom, furniture and lighting sales are running 17.3 per cent up on the same month in 2003, while sales of hardware, paints and glass are up 10.8 per cent.
Specialised clothing and footwear stores appear to be benefiting from the economic upturn with sales up 8.3 per cent. Apart from the 3.9 per cent decline in bar sales, the other area showing a decline is electronic goods such as TVs, DVDs, where sales are down 6.8 per cent.
Consumer confidence surveys have shown a sustained rise over the past year. However confidence remains below the peak reached during the boom years and consumer spending has picked up only gradually.
In a comment on the figures, Davy stockbrokers said that retail sales volumes in the first half of the year were 3 per cent ahead on an annual basis which was "the fastest annual pace of growth in four years". Goodbody stockbrokers said that discounting in the summer sales should have kept retail volumes rising over the summer months.
Why are oil prices so high?
Rising demand
China's economic expansion has given a dramatic boost to world oil demand. Chinese crude imports are up 40 per cent so far this year and show no sign of slowing despite high prices and Beijing's efforts to calm economic growth.
Indian oil consumption is rising fast too. Solid growth in the US economy, which devours a quarter of all world oil, has not slowed yet despite oil price gains.
Capacity crunch
OPEC producers have pushed supplies to the highest level in 25 years in an effort to keep prices under control.
This has left no capacity outside top exporter Saudi Arabia and even Riyadh has little to spare.
The strain on the supply system has left it more vulnerable to supply disruptions like outages in Iraq caused by sabotage.
Political tensions
Violence in post-war Iraq has restrained exports. Supplies from Russia also are a concern. Leading oil company Yukos is fighting bankruptcy after the Kremlin cracked down on oligarchs like former Yukos chief Mr Mikhail Khodorkovsky.
Traders fear Islamic militants could target oil infrastructure in OPEC's biggest producer, Saudi Arabia. Deadly attacks on foreign oil workers in the Saudi oil city of Khobar in May fostered fears of a larger attack on the kingdom's tightly-protected oil facilities.
Refinery bottlenecks Environmental regulations in the West are pushing up the price of making fuel, forcing companies to build expensive new facilities and making it harder to ship supplies between regions.
US gasoline demand is rising in part because of the growing numbers of low-mileage-per-gallon sports utility vehicles on America's highways.
The United States accounts for about 45 per cent of world gasoline consumption.
Scarcer oil
Big oil reservoirs are becoming harder to find and more expensive to develop. Many of the oil provinces outside OPEC are mature, which means that finds are now smaller, need more costly technology to develop and fall faster from peak production.
