Irish High Steet spending: some volume growth, boosted by falling prices

The volume of Irish retail sales excluding the motor trade peaked in December 2007 and fell by almost 15% over the following four years , recovering marginally in 2012 before making a double bottom early last year ( using  a 3-month average to reduce some of the volatility in the CSO data). Since then the volume of spending has picked up somewhat, rising by 5.2% from the low,  with the annual increase in August at 3.7% .Still a long way from the peak, therefore, but at least there is some signs that consumers have returned to the High Street.Total retail sales are up 6.8% in volume terms, thanks to strong car sales, and overall consumer spending has  also shown some growth, albeit at a slower pace (spending was up an annual 1.8% in the second quarter) implying that spending on services has yet to show the same forward momentum.

The upturn in  High Street sales is widespread, with most areas seeing some increase in volumes over the past year. The most pronounced is in Furniture and Lighting, up an annual 20.7% , no doubt reflecting the pick up in housing transactions and completions, followed by Electrical goods with an 11.6% gain. The volume of spending on Footwear and Clothing is also recording strong growth( 5.4%)  as is Motor Fuel (4.4%), which is not surprising given the surge in car sales this year (an increase of 24% according to the retail data). Spending on Food tends to be less volatile than most other areas and that too has seen growth, with the volume of sales up 3.2%, although spending on beverages and tobacco is down.

Spending in volume terms is  also falling in some other areas, including Pharmaceuticals and Cosmetics (-0.8%), Newspapers and Books (-1.6%) while in Bars the figure is -2.7%. It is not clear that the  latter has yet bottomed, with the volume of sales down over 37% from the peak , while the fall in the volume of Newspaper and Book sales is even starker, at over 47%, although there has been some modest growth in the past few months.

Some good news then for at least some areas of the High Street, although a closer look at the data reveals that the growth in actual spending is not as pronounced, with price falls still evident in most sectors. The price of Electrical goods is down by over 5%, for example, so reducing the increase in the value of spending to 5.8% despite a volume increase of 11.8%, with Furniture and Lighting also seeing a pronounced price fall, this time of 3.6%. A few sectors have attempted to raise prices, including Newspapers and Bars but the total  price deflator for retail sales ex autos fell by 1.7%, so reducing the rise in the value of sales to 2% despite a volume increase of 3.7%. The pace of price decline has eased a little over recent months, from -2% earlier in the year, but it is clear that although conditions for High Street businesses are indeed improving, the volume figures give a more upbeat trend than  experienced by many retailers.