THE RETAIL TRADE is continuing to struggle as customers opt to hang onto their cash, the latest CSO figures have shown.
The Retail Sales Index, published this morning, shows that both the value and volume of sales fell in January 2012 when compared both to December 2011 (boosted by the Christmas shopping season) and January 2011.
The volume of sales was down by 3.7 per cent when compared to December, but by 0.8 per cent when compared to January 2011.
Similarly, the value of sales is down by 3.7 per cent from December, but down by a modest 0.3 per cent compared to the first month of last year.
January marked the first month of increase in VAT rates from 21 to 23 per cent, which would account for the slightly smaller drop in the value of transactions.
With January a traditionally strong month for New Year shoppers, however, the figures will be worrying for the sector.
The figures show that the retail sector remains largely in flux, with sales figures continually growing and contracting across 2011 as the Irish public wavered between confidence in the financial outlook and nerves about the effects of the government’s ongoing austerity drive.
Retail Ireland director Stephen Lynam said the VAT hike had probably encouraged consumers to buy in December instead of January, with the end result that the January sales were broadly shunned.
“The high cost of rents, rates, tax and labour are causing retailers real difficulties and depressing consumer demand. Action is needed on all these fronts, including a review of VAT returns at the end of next month,” Lynam said.
Retail Excellence Ireland’s chief executive David Fitzsimons said retail sales had been in consistent decline since 2008, and that the January figures showed that “another very challenging year, with business closure and additional redundancies, is unavoidable”.
“Following the launch of the Action Plan for Jobs, we would urge local authorities and Government departments to speedily implement the recommendation that business costs are reduced,” he said.
The Irish Small and Medium Enterprises Association demanded that the government takes a lead to tackle “the crisis in the retail trade”.
Chief executive Mark Fielding said retail was responsible for over 10 per cent of GDP and 15 per cent of all jobs, but that the government’s jobs plan had “skated over the sector with barely a mention”.