Consumers were much less enthusiastic about spending money in 2002 than in any of the preceding three years, according to data on retail sales released by the Central Statistics Office (CSO) yesterday.
The figures show that when volatile pricing factors are excluded, retail sales grew by just 0.7 per cent last year. This compares to growth of 3.1 per cent in 2001 and a jump of 11.9 per cent in 2000.
When motor sales are excluded from the numbers, sales growth of 2.2 per cent was recorded last year. On a value basis, sales grew by 4 per cent, down from 5.9 per cent in 2001 and 16.3 per cent in 2000.
Economists said the downward trend corresponded with slowing momentum in the wider economy, and was consistent with growing caution among Irish consumers. Retail sales account for about two-thirds of all consumer spending.
In December, the volume of retail sales declined by 0.4 per cent when compared to the same month of 2001. When the motor trade is excluded, the fall extends to 0.5 per cent. On a value basis, sales grew by 3 per cent in December, a subdued rise that commentators said was consistent with anecdotal evidence of weak pre-Christmas retail activity.
The period covered in the latest figures ended on December 28th, just as the winter sales were beginning.
Inflation numbers for January, released last week, showed that the retail sector was engaged in heavy discounting at the start of this year.
"After a poor December, retailers had no choice other than to slash prices to get the consumer to spend in January. There is no economic rocket science there," said Mr Jim Power, chief economist with Friends First yesterday.
Mr Power said the overall figures made for "horrendous reading" and warned that the factors weighing on consumer confidence last year would remain in play throughout 2003.
He is predicting volume growth of 0.5 per cent in retail sales this year.
Economists at Davy Stockbrokers agreed that 2003 would see consumers' incomes being squeezed from a number of directions, including inflation, taxes and employment levels.
When motor sales are excluded, Davy is expecting sales growth this year to be no stronger than last year's 2.2 per cent.
Mr Austin Hughes, chief economist with IIB Bank, made a similar forecast, pointing to gloomy consumer expectations on wages as a key to spending growth this year.
"Income prospects look a lot less favourable," Mr Hughes said, adding that the economy could not rely upon consumers to provide much momentum in 2003.
Figures for the period between October and November, which the CSO said offered a better indication of underlying trends than the monthly numbers, show a 0.3 per cent volume increase on the three months ending in September.
In November, the last month for which detailed data is available, significant declines were noted in furniture and department store sales.
Describing such items as "feel-good" purchases, Mr Hughes attributed the falls to mounting consumer concerns about the economy.
