Retail sales flat as consumers struggle with higher fuel costs

Retail sales remained largely unchanged in May, according to the Central Statistics Office (CSO), as Irish consumers faced ongoing challenges related to rising fuel costs. The data revealed that the volume of retail sales saw no significant change during the month, though there was a modest increase of 0.8 percent over the previous 12 months. This suggests that while consumer spending has been affected by economic pressures, there remains a degree of resilience in overall retail activity.

The CSO highlighted that the fuel sector experienced a notable decline in value, with a 2 percent drop in May compared to the prior month. However, this figure contrasts with the 7 percent increase in value when compared to May 2025. By volume, fuel sales decreased by 0.1 percent in May and by 4.6 percent over the past year. These fluctuations underscore the impact of inflationary pressures within the energy sector, which the CSO attributed to the ongoing conflict in the region and disruptions to global energy supplies.

The cost of transport fuels, including petrol and diesel, along with home heating oil, has seen a substantial rise since the outbreak of hostilities involving Iran. Although recent weeks have witnessed a slight reduction in oil prices, experts predict that inflation will persist for several months, thereby reducing household purchasing power. This trend is particularly evident in sectors where demand is sensitive to price changes, such as food and beverages, where sales volumes declined by 4.5 percent in May.

Excluding the typically volatile category of car sales, retail sales in the Republic showed a small but positive growth. The monthly volume of retail sales increased by 0.2 percent, with annual growth reaching 0.4 percent. Sectors experiencing notable growth included furniture and lighting, which saw a 2.1 percent increase, followed by car sales at 1.8 percent and other retail categories at 1.5 percent. Conversely, declines were observed in food, beverages, and tobacco, which registered a 4.5 percent drop, alongside pharmaceuticals, medical, and cosmetic products, which saw a 1.9 percent decrease, and bars, which experienced a 0.9 percent decline.

Meanwhile, energy prices in both the Netherlands and the United Kingdom saw an uptick on Monday, driven by uncertainties surrounding the flow of gas through the Strait of Hormuz. Despite recent agreements between Iran and the United States to pause hostilities in the Gulf and Middle East, tensions remain high, with renewed attacks reported in the region. Wayne Bryan, head of European gas research at LSEG, noted that these developments could influence future pricing trends, given the heavy reliance of many economies on international gas markets.

As the situation in the Middle East continues to evolve, the implications for consumer behavior and economic performance remain uncertain. While some sectors demonstrate signs of recovery, others continue to face headwinds, reflecting the complex interplay between global events and local market dynamics. With inflation expected to linger, the challenge for retailers and consumers alike will be navigating these conditions without compromising essential spending. Looking ahead, further data releases and geopolitical developments will likely shape the trajectory of retail sales and broader economic indicators in the coming months.