17 Apr 2018

Retail sales update: Retail sales growth lifted to 4.9% y/y in February

Annabel Bishop

Chief Economist

Primarily on the increased contribution from the general dealers sector

Figure 1: Contributions to retail sales by type of retailer
  • Retail sales growth jumped to 4.9% y/y in February, after logging growth of 3.3% y/y in January (revised upwards from 3.1% y/y). The February outcome came in well above consensus expectations of 3.0% y/y.
  • Breaking down the numbers, the largest positive contributor to the headline outcome stemmed from the general dealers category, which yielded a contribution of 1.8%, on the back of growth of 3.9% y/y. This was up strongly from its 0.5% contribution in January and owing to the fact that this sector makes up 42.6% of the retail basket this would explain the boost in the topline number.
  • The other grouping which enhanced headline growth was the textiles category, which yielded a contribution of 1.1% on growth of 7.1% y/y. This category holds a 19.1% weighting of the retail basket (see figures 1&3).
  • Retail inflation at 1.9% y/y, remained well below CPI, as retailers’ margins remained compressed amidst price competition.
  • Consumer activity and by extension, growth in retail sales has been supported by recent improved sentiment, coupled with a more favourable inflationary environment.
  • This is reiterated by retailers in the BER’s latest Q1.18 BER Retail Survey, which states that “(a) net majority of 8% of retailers expects general business conditions to improve in 2018Q2, while a net 18% expects higher sales volumes compared to a year ago”.
  • However multiple consumer taxes as announced in the 2018 budget, introduced from the 1st April, could dampen future performance.
Figure 2: Retail Business Confidence
Figure 3: Retail trade sales by type of retailer (at constant prices)