13/10/2011: CPI for Ireland: September 2011

Consumer prices inflation is now running above 2.5% in Ireland and the usual culprits are to be blamed.

Consumer Prices in September rose +0.3% mom against a decrease of 0.1% recorded in September 2010. As a result, per CSO, "the annual rate of inflation increased to 2.6%, up from 2.2% in August 2011". Annual inflation is now running above 2% target every month since January 2011.

The EU Harmonised Index of Consumer Prices (HICP) for Ireland rose +0.1% in the month, compared to a decrease of 0.2% recorded in September 2011. The annual rate of HICP was 1.3% higher in September compared with September 2010. Annual HICP was running at 1% increases in July and August - the lowest rate of HICP in Europe.

Chart below illustrates:

All Items CPI is now in annual expansion since August 2010. Moderate rates of under 1.7% CPI were exhausted in January 2011 and since then we have entered the period of excessive inflation, especially compared with the overall stagnant domestic demand activity. This means that accelerating price increases are no longer acting to support economic growth, but are compressing already strained household budgets and increasing future pressure on interest rates. It is worth noting that ECB decisions on rates are based on HICP, not CPI, which means that with Euro area HICP at 2.5% in August and July, against HICP rates at or above 2.5% every month since April 2011, the rates direction should be up.

Pert CSO, the most notable changes in the year were:

• Increases in Housing, Water, Electricity, Gas &Other Fuels (+8.9% in September 2011 which comes on top of 8.5% rise in a year to September 2010), Miscellaneous Goods &Services (+6.5%), Transport (+4.2%) and Health (+3.4% - unchanged mom but up yoy in September, against an annual rise of 0.5% in September 2010).
• Decreases in Furnishings, Household Equipment & Routine Household Maintenance (-2.3%) and Education (-1.6%).
• The annual rate of inflation for Services was 3.6% in the year to September, while Goods increased by 1.3%.

The most significant monthly price changes were:

• Increases in Clothing & Footwear (+5.4% - mostly due to seasonal effects) and Housing, Water, Electricity, Gas&Other Fuels (+1.7% - mostly due to mortgages interest costs rising +3.1%mom, liquid fuels (i.e. home heating oil) costs up +1.7%, electricity (+1.6%)).
• Decrease in Transport (-0.7% - primarily due to decreases in airfares which fell 16.9%. Increases were recorded in bus fares (+8.8%), bicycles (+0.4%) and petrol (+0.3%)).

Charts below illustrate:

Charts below detail the rising gap between state-controlled prices and overall CPI as well as the gap between state-controlled prices and private sector prices:

29/08/2011: Retail Sales and Consumer Confidence: July 2011

In the previous post, we looked at the latest data on retail sales for Ireland for July 2011 (here). Now, let's update the data for retail sales and consumer confidence.

Per ESRI latest data, consumer confidence in Ireland dropped from 56.3 in June 2011 to 55.9 in July, with 3mo moving average down to 57.2 in July from 57.9 in June.
As charts below indicate, Irish retail sales continue to underperform historical trends, but, crucially, are running well below the levels that would be consistent with the consumer confidence readings (both contemporaneous, lagged 1 period and 3mo moving averages):
The above suggests that we are still in - both, structural (consumer confidence and sales lags signals to the left range of the trend) and cyclical (below trend) - weaknesses in terms of retails sales and consumer demand.

29/08/2011: Retail Sales for July - a mixed bag swinging in the headwinds

The volume of retail sales in Ireland declined by 0.6% in July 2011 yoy and there was a monthly change of -0.5%. The value of retail sales decreased by 0.5% yoy and there was a month-on-month change of -0.4%.

• Current value of sales index reading is 88.7, down from 89.1 in June and below the 3mo running average of 88.8. The index is still ahead of the January 2011-to-date average of 88.3.
• Value of sales index is now 25.65% below its peak in February 2008.
• Value of retail sales index now reads 93.2, down from 93.7 in June. The index is now slightly below its 3mo running average of 93.3 but slightly ahead of 6mo running average of 92.8. The volume index average for January 2011-to-date is 92.3.
• Volume of retail sales is now down 19.86% on its peak attained back in October 2007.
  

If Motor Trades are excluded, the volume of core retail sales fell by 2.3% in July 2011 against July 2010, while there was a monthly increase in sales volumes of 0.5%. There was an annual decrease of 1.2% in the value of retail sales and a monthly increase of 0.8%.

• Value of core retail sales now stands at 95.7, up from 94.9 a month ago and ahead of 3mo running average of 95.3, but still below 6mo running average of 95.9. In comparison, 2010 average was 97.6 and 2011 running average to-date is 96.2.
• Core retail sales in value are now 19.3% below their December 2007 peak.
• Volume of core retail sales is now reading 99.1, up from 98.6 a month ago, and against 98.8 average for the 3mo and 6mo running average of 99.3. 2010 annual average is 102.3, while January 2011-to-date average is 99.5.
  
• Volume of retail sales is now 15.3% below its November 2007 peak.
  

In July, Motor Trades (+7.1%) and Non-Specialised Stores (+0.4%) were the only two
categories that showed year-on-year increases in the volume of retail sales. Largest yoy drops were posted by Books, Newspapers and Stationery (-9.5%), Other Retail Sales (-6.9%) and
Pharmaceuticals Medical & Cosmetic Articles (-6.8%) in the volume of retail sales.

A follow up post will update on the data for consumer confidence and links to retail sales data.

11/08/2011: CPI for July 2011

CSO reported Consumer Prices for July today. Here are some headline numbers and updated charts:

• As measured by the CPI, remained unchanged in the month of July relative to June. There was also no mom change in July of last year. CPI index stood at 103.9 in June and July 2011 relative to December 2006 base and 122.7-122.7 relative to December 2001 base. This compares to index readings of 101.2 in June and July 2010 (2006 base) and 119.4 (2001 base).
  
• As a result of the above monthly movements, the annual rate of inflation remained unchanged at 2.7%.
• The EU Harmonised Index of Consumer Prices (HICP) decreased by 0.2% in the month, compared to a decrease of 0.1% recorded in July of last year. July 2011 HICP index stood at 106.5, down from 106.7 in June, while July 2010 index was 105.4, down from June 2010 reading of 105.5.
  
• The annual HICP inflation was 1.0% in July 2011 relative to July 2010.

• All items CPI, therefore is now running at 2.7% for the third month in a row, down from 3.2% in April 2011. A year ago, All items CPI was showing deflation of -0.1% and July 2010 was the last month of annual deflation in the current crisis period.
  

The most notable changes in the year were increases in

• Housing, Water, Electricity, Gas &Other Fuels (+10.3%) - with significant (over 10%) weight in household spending basket. Increases in this category were led by mortgage interest cost hikes which are now 25.2 up on last year and were 2.3% higher than a month ago (please note, our Financial Regulator and the Gov are not making any concerned statements about mortgages interest costs, while talking about the need to restore lending to the corporate sector). In addition, Electricity is up 4.6% annual, while liquid fuels are up 20.1%. Once again, no concern from the Government, whatsoever, on the issue of these costs increases.
  
• Miscellaneous Goods &Services (+7.2%), driven primarily by hikes in Health Insurance (+21.4% yoy and 0.1% mom). Overall Insurance services costs are now 14.5% up yoy, but down 0.3% mom.
  
• Transport (+3.5%) - also with >10% weight in expenditure basket. Transport costs were primarily driven by 12.8 annual inflation in Fuels & lubricants sub-category (led by 12.6% annual hike in Petrol and 13.7% hike in Diesel), and Transport services (+7.7% yoy and 3.8% mom) where Air transport prices were up 25.0% yoy (+11.8% mom) and Sea transport (+12.5% yoy and 13.3% mom)
  
• Health (+3.4% annual, although there was a decline of 0.1% mom). In this category, Medical products, appliance and equipment sub-category was up 1.4% yoy and down 0.2% mom, while Outpatient services declined 1.1% yoy and 0.1 mom. The real inflation here comes from the Hospital services, where costs are up a massive 9.8% yoy although there was no change mom. Again, I am yet to hear any real concern from the Government on this matter.
  

There were decreases in:

• Furnishings, Household Equipment & Routine Household Maintenance (-2.9% - marking 43rd month of annual decreases in prices in this category, starting from January 2008)
  
• Education (-1.3% - 10th consecutive monthly negative annual reading, by no change in mom inflation), although Primary education costs were up 1.3% yoy, while Secondary education costs were up 0.8% yoy
  
• Clothing & Footware (-0.7% - marking 43rd month of annual decreases in prices in this category, starting from January 2008) and
• Restaurants and Hotels (-0.7% - 26th consecutive monthly negative reading).

Inflation in the state-controlled sectors (sectors with either significant presence of regulated semi-state companies and/or state providers - e.g. education - or with significant shares of taxation measures relative to prices of goods and services - e.g. Alcohol Beverages & Tobacco) was running still ahead of private sectors inflation, with state-controlled inflation running at 1.02% annually, against private sectors inflation running at 0.53% in July. Both measures are down on June readings of 1.04% and 0.57% respectively.

Per CSO, "The annual rate of inflation for Services was 4.0% in the year to July, while Goods increased by 1.0%."

30/07/2011: Detailed analysis of Retail Sales figures for June 2011

The volume of retail sales rose +0.2% in June 2011 compared with June 2010 and +1.1% mom. The 3mo average for the volume index is now at 93.07, while the 6 mo average is 92.3. Both below the current monthly reading. June reading marks the second consecutive monthly increase in the index. 2010 average is 93.3, while 2011 average to-date is 92.3, behind that of 2010.

The value of retail sales rose +0.4% in June 2011 when compared with June 2010 and there was a month-on-month increase of +0.7%. The value index now stands at 89.4 (marking the second consecutive month of increases) against 3mo average of 88.7 and 6mo average of 88.3. Compared to 2010 average of 88.9, the 2011 average to-date is now at 88.3.


Thus, the volume of retail sales in June 2011 stood at 94.1 down 16.73% relative to the peak. Current monthly reading for the value index is 23.59% below the peak for the series.
Couple of charts for quarterly changes:

Of course, the problem with the above data is that it is distorted by the motor sales volumes and values, especially pronounced due to the expiry of the Government incentive scheme for new motors purchases in June 2011. Hence, ex-motors data paints a dramatically different picture of continued deterioration in retail sales.

Excluding Motor Trades, the volume of retail sales fell 4.2% in June 2011 when compared with June 2010, while there was a monthly decrease of 0.1%. Thus, June marked a 5th consecutive month of declines in the colume of retail sales ex-motors. The index is now at 98.2, below 3mo average of 98.5 and 6mo average of 99.45 and well below 2010 average of 102.2.

Ex-Motor Trades there was an annual decrease of 3.2% in the value of retail sales and a
monthly decrease of 0.5%. Index reading of 94.6 in June 2011 stands below 3mo average of 95.3 and 6mo average of 96.2 as well as 2010 annual average of 97.6. The index has now declined (mom) for 3 months in a row.

In year on year terms, volume index retail sales ex-motors are now down 14 moths in a row and in terms of value index for 36 months in a row. In 2010, index of volume of retail sales ex-motors posted an average monthly decline of 0.28%, while in 2011 to-date the same figure is 0.03, while the latest 3mo average is 0.67% decline. For value of sales ex-motors, the average monthly decline was 0.24% in 2010, against 0.08% average monthly decline in 2011 to-date and 0.8% decline in 3 months to-date. So clearly, last 3 months suggest increased rate of deterioration on both 2010 and H1 2011 averages.


Relative to peak, the volume of retail sales ex-motors has now fallen 13.33%, while the value of retail sales ex-motors is down 19.42%. Both series continue their downward trajectory.


So overall, in June 2011, Motor Trades were up +21.9% yoy in volume. Alongside motor sales, sales of Electrical Goods (+5.2%) and Furniture & Lighting (+2.6%) were the only three categories that showed year-on-year increases in the volume of retail sales this month. Fuel (-12.0%), Hardware Paints & Glass (-10.4%) and Other Retail Sales (-8.1%) were amongst the ten categories out of 14 total that showed year-on-year decreases in the volume of retail sales this month.

In terms of value of retail sales, Motor Trades posted an annual increase of 18.3% - the only category of sales that posted an annual increase in value. Hardware & Paints (-10.9% yoy), Other Retail Sales (-6.0%), Bars (-5.8%) were the categories with largest (above 5%) declines in the value. Overall, 13 categories out of total 14 have posted yoy declines in value of retail sales.

My previous analysis of the Consumer Confidence indicator from the ESRI and high level dynamics in retail sales (see link here) shows that these trends toward continued pressures in the retail sector are expected to continue over coming months.

30/07/2011: High level data on Retail Sales & Consumer Confidence

Let's update the latest stats on retail sales in Ireland and consumer confidence - a separate, more detailed post will look on the specifics of the retail sales data.

The volume of retail sales rose 0.2% in June 2011 yoy and +1.1% mom. However, all of the increases were accounted for by motor sales.

The value of retail sales rose +0.4% in June 2011 yoy and +0.7% mom. Again, all effects are due to motor sales increases.

Provisional estimates for Q2 2011 show the volume of retail sales fell by 1.7% yoy and rose 1.8% qoq. Once again, the figures were dramatically improved by motor sales.

Consumer confidence, measured by the ESRI index have posted a dramatic drop in June from 59.4 in May to 56.3. Index is now 5.38% down qoq, 5.219% down mom and 17.084% down yoy.

So while overall retail sales indices signal some slight improvements in conditions, consumer confidence indicator shows that in months ahead there is likely to be renewed pressure on retail sales. In fact, of course, there is no divergence between the two sets of indicators, as retail sales continue to fall when taken on ex-motors basis.

Longer-term averages also suggest further softening in the retails sales
Three months moving averages are now:

• Index of Value of retail sales up 0.49% qoq, 0.189% up mom and 1.743% down yoy
• Index of Volume of retail sales up 1.276% qoq, 0.253% up mom and 2.218% down yoy
• Consumer confidence is up 23.291% qoq, 5.426% up mom and 8.299% down yoy.
  

28/05/11: Retail sales for April 2011

As promised in the previous post, here's the analysis of retail sales for April 2011.

Headline figures:

• The volume of retail sales (i.e. excluding price effects - which in effect means excluding the revenue factor or margin factor for retail services providers) was down by 3.9% in April 2011 year on year (for the third month in a row).
  
• There was a monthly decrease of 0.8% for the first month after two consecutive months of increases (retail sales volume was up 3.1% in February and 0.8% in March with both increases attributed to the correction on big contractions in December 2010 (-1.5%) and January (-3.4%).
  
• Over the last 6 months, therefore, volume of retail sales was down cumulative 3.07%. since January 2008 the volume of retail sales has fallen total of 20.92%.
• The value of retail sales decreased by 3.5% in April 2011 year on year, marking a third consecutive month of annual decreases.
  
• There was a month-on-month decline of -0.7%. The wedge between value and volume decrease can be interpreted as being driven by inflation, suggesting modest inflation in retail sales sector. The monthly pattern of retail sales value is virtually identical to volume with April decrease coming after two months of moderate increases which compensated for the poor weather (and poor Christmas sales) in December-January.
• Over the last 6 months value of retail sales has declined by 2.56% held above the decline in volume index solely by rising prices. Since January 2008 Irish retail sector activity as measured by value of retail sales (turnover and margins being best reflected by this metric, rather than CSO-preferred volume index) has fallen by a cumulative of 26.1%.

Charts to illustrate:

• Excluding Motor Trades there was an annual decrease of 2.4% in the value of retail sales in April. This was the 34th consecutive month of annual decreases.
  
• Ex-Motors retail sales posted a monthly decrease of 0.3% in April, continuing up-down monthly cycle that started in August 2010.
• Over the last 6 months, value of ex-motor retail sales has increased by 0.1% and since January 2008 the value of core retail sales is down 18.3%.
  
• The data on value suggest that inflation is starting to pick up in core retail sales.
• Ex-Motors volume of retail sales fell a massive 5.0% yoy in April (again, supporting the assertion that the end of sales season saw price increases across core retail sales in 2011 relative to 2010, which means that with lower disposable incomes Irish consumers are now facing rising cost of living once again). This marked 12th consecutive month of volume decreases in annual terms.
  
• Month-on-month core retail sales were down 1.0% in April, after posting zero change in March and contracting 0.3% in February.
• Over the last six months, core retail sales volumes have declined by 2.16% and since January 2008 they are down 14.25%.
  

Charts to illustrate:
Sources of core declines were:

• In terms of volume: Fuel (-11.9), Pharmaceuticals Medical and Cosmetic Articles (-7.4%) and Furniture & Lighting (-16.2%) were among the ten categories that posted year-on-year decreases in the volume of sales in April. Books, newspapers & stationery fell 14.9%, Bars -6.0%, Food, beverages & tobacco were down 5.7%.
  
• In terms of value: largest annual declines were posted in Food, beverages & tobacco (-5.2%), Pharmaceuticals Medical & Cosmetic Articles (-6.2%), Furniture and Lighting (-19%), Electrical Goods (-8.5%), Books, Newspapers and Stationery (-14.4%), and Bars (-4.7%).
• The list of heaviest-hit sub-categories of retail sales in annual terms suggests that these might signal renewed push for shopping in Northern Ireland. In particular, large ticket items and higher cost items might be now more efficiently purchased outside ROI given the strength of the Euro. Another possibility might be continued drive by consumers into on-line sales channels which come from outside Ireland.
  

Lastly, some anecdotal evidence - reports by retail shop owners I had communications with - suggest that May might be another bad month for the sector already virtually decimated by the crisis.

27/05/11: Retail sales and consumer confidence

Updated chart for retail sales (see analysis of today's release to follow) and consumer confidence:
ESRI's Consumer Confidence index for April was down from 59.5 in March to 57.9. This decline was not marginal, but it does come at the end of three months of increases, so can be seen as at least in part a technical correction. Three month moving average continued to increase simply due to the momentum - a point that was missed by those observers who made much of hay out of this increase.

Contrary to the Sentiment momentum, of course, the Retail Sales fell in April:

• the volume of retail sales (i.e. excluding price effects) decreased by 3.9% in April 2011 when compared with April 2010 and there was a monthly decrease of 0.8%.
  
• ex-Motor Trades the volume of retail sales decreased by 5.0% in April 2011 yoy, while there was a monthly decrease of 1.0%.
• the value of retail sales fell 3.5% in April 2011 yoy and -0.7% mom.
  
• ex-Motor Trades annual series for value fell 2.4% and there was a monthly decrease of 0.3%.
  

Overall, it is believed that the 3mo MA is a better predictor of the general direction in the series. I am not so sure. Here's why. Both the contemporaneous (spot) indices and 3moMA are pretty much similar in tracking volume and value of retail sales. The charts below illustrate:
The 3moMA is somewhat better on both value and volume, but not by a massive margin.

Incidentally, the ESRI release on Consumer Sentiment index this month forgot (for some probably simple error reason) to update data tables from January 2011 through April 2011 (link here).

Economics 29/10/10: Retail sales

After two weeks of absolutely excessive work loads, including a week of marathon teaching (gotta love that feeling of total exhaustion after 5 days worth of 6 hours straight lecturing on top of regular work), the blog is back.

The first order of the day - catching up with today's data. Retail sales... well, they are still tanking. Predictably, given weakening sterling (incentive to shop North), beginning of the festive season shopping (another incentive to head North for larger ticket items savings) and continued decline of overall economy.

Per CSO today, let's deal with the volumes and values of total sales first

• Retail Sales volume decrease by 0.3% in September 2010 compared with September 2009
• The volume of retail sales (i.e. excluding price effects) decreased by 0.3% yoy and declined 0.9% mom.
• The value of retail sales decreased by 2.6% yoy and there was a mom change of -1.2%.

Few charts now:
Looks like bottom fishing just got slightly more fun on both value and volume. And it's too bad you can't short retail sales:
Relative to peak, total sales are......errr... sickening?

As I highlighted on many occasions before, our Government's desire to subsidize Japanese, Korean, French, German etc manufacturers of motor vehicles, coupled with the vanity plates year have meant that our total retails sales are rather overly optimistic when it comes to determining the real retail environment out there. So let's drop Motor Trades out of the data:

If Motor Trades are excluded, there was

• an annual decrease of 4.1% in the value of retail sales and a monthly decrease of 0.9%
• volume of retail sales decreased by 2.5% in September 2010 yoy and fell 0.8% mom.
• thus, increases yoy in volumes were posted in: Motors (+13.2%), Non-Specialised Stores (+0.8%)
• of course, decreases were led by Other Retail (-12.4%) and Bars (-11.6%).
• mom declines in the volume "were evident in ten of the categories while only three categories showed monthly increases in September 2010". So broadly, monthly adjusted series were heading down.

Charts:
Yeah, that does look like an AIB share price chart... and then the rates of change:
Painful? Yes. Brian & Brian will not be happy campers - VAT receipts must be depressed. Jobs are also clearly going to be under pressure as we exit festive season, implying that absent a dramatic reversal of the recent trends, retail sector will be in severe pain comes January.

Not that it was avoiding that pain in recent past:

We now have provisional estimates for Q3 2010, so let's update quarterly graphs - which confirm broadly the weakening trend:

• volume of retail sales increased by 0.2% in the third quarter of 2010 compared with the same quarter in 2009, and
• there was no change in the volume of retail sales when comparing the third quarter of 2010 with the second quarter.
  
• If Motor Trades are excluded the volume of retail sales decreased by 2.3% year-on-year, while the quarterly decrease was -2.0%.
  

Economics 1/10/10: Retail sales data

Oh, let's cut the bull, folks. The retail sales data is making rounds the banks 'economists' notes with all the hoopla of the 'positive news' arguments. So things are turning corners?.. Actually, not really.

With motors:

• Value of sales rose 1.3% mom in August and a re down 1.7% yoy;
• Volume of sales was up 1.1% mom and 1.3% yoy

Conclusion, with motors included, we are still selling more stuff at ever-lower prices, though this time around declines in prices did not outpace increases in volume. Which means that no jobs are being created. If we take on board the fact that Euro remains relatively weak compared to last year vis-a-vis our main trading partners outside the Euro zone, implying we are buying imports at a higher price, the margins in retail sector gotta be shrinking even more than the volume/value gap above suggests. Which, in turn, implies that there aren't any new jobs being created in the retail sector on the back of the latest 'turnaround'. The whole thing about 'great news on retail sales front' is a damp squib.


And if you want to see even deeper into the official spin, take a look at ex-motors retailing:

• Value of core sales was flat mom in August and is down 3.6% yoy;
• Volume of core sales was up 0.2% mom and 1.4% yoy

So declines outpacing volume increases is clearly operative here.

Dig deeper and take a look at the breakdown of sales across main business lines.

• The largest increases in value took place in Books, Newspapers & Stationary (+4.7%). Given all the great news we've heard about Ireland in August, this is hardly surprising.
  
• Second largest value increase (ex-motors) mom took place in... errr... Fuel (+4.5%). That wouldn't be an indicator of our consumer confidence in the future, but the price increases in the sector where prices are controlled by the Government.
• Durables continued to tank: Electrical goods (-3.2% value and -2.5% volume mom), Furniture and Lighting (-1.% and -0.7% respectively) - again, not a great sign.

The worst part of this data is that it continues to show that there is no restart to household investment in sight. Before the households begin investing, they will usually start consuming more durable goods. This is clearly not happening.