Consumer spending could rise by 9% in volume terms this year helping to maintain Ireland’s status as the the eurozone’s fastest growing economy for a second consecutive year.
CSO figures published yesterday show a 1.4% increase in headline retail sales volumes for March, when compared to the previous month. When measured on a year-on-year basis, March’s spending levels were up 9.2%. When car and vehicle sales are excluded from the figures however, monthly sales were down by 1% and up by 4.7% on an annualised basis.
“Headline retail sales were up 6.4%, in volume terms on average last year, while sales excluding cars were 3.7% higher in 2014,” said Alan McQuaid, chief economist with Merrion Stockbrokers.
“We are now looking for a volume rise of 6% to 9% in headline sales this year, and 3% to 5% in core sales, which augurs well for Irish GDP growth in 2015.
“GDP is set to come in above 4% again this year, in real terms, and top the eurozone growth league table for the second year running,” he added. However, others struck a note of caution after the latest CSO data.
“Annualised retail sales value, which is a much more important figure in determining retailers’ capacity for any cost increases, increased by only 1.2% when motor trades are excluded,” said Sean Murphy, deputy chief executive of leading industry representative body Retail Excellence Ireland.
“The Irish retail industry operates in a high-cost environment, serving a consumer base that is forced to pay one of the most regressive VAT rates in the world, at 23%. And a society that still grapples with significant household debt.
“Until consumers have more money in their pockets and retailers can operate in a more cost-effective environment, sales will remain flat and job growth in the sector will remain soft,” he added.
The low growth in the value of sales underlines why many retailers here remain extremely cautious about hiring new staff and very concerned regarding talk of any mandated wage increases in the absence of a stronger recuperation in the domestic economy,” said Retail Excellence Ireland.
“A key domestic driver of personal spending will be the state of the labour market and the signs are positive on this front, as we’ve seen with the most recent official employment and live register data,” said Mr McQuaid.
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