Palma.—At the start of the year the government freed up the retail market in a bid to help it climb out of the recession by allowing the retail sector to offer special discounts and offers all year round, not just during the two traditional Winter and Summer sales period.

However, consumer confidence appears to continue to be so low, most high streets are still suffering. Yesterday National Statistics Institute data showed retail sales fell by 4.6 percent year on year in May, the thirty-fifth month of declining sales, after a drop of 4.8 percent a month earlier. “While prices were more or less in line with what we expected, sales remain worrying.
Clear signs “These figures don't give a clear sign of economic recovery,” analyst at Citi in Madrid Jose Luis Martinez said.
The national consumer price index rose by 2.1 percent in June on an annual basis according to preliminary data, up from 1.7 percent in May, while EU-harmonised consumer prices rose by 2.2 percent year-on-year, above forecasts.

Savings of up to 50 percent are already being advertised but the small to medium sized retailers are not expecting a Summer sales boom. “Many of us have been offering half price savings since the law changed but it's made little difference, so what difference are the sales going to make,” a spokesperson for the small to medium sized traders association said.

And, they are worried about the strong competition from the hypermarkets and superstores.
The large hypermarkets in particular have been enjoying an upturn in trade thanks to residential tourism this year and they are expected to mount a fierce sales campaign.

First two weeks
Sources for the large retail sector said that they have noticed over the past few years that the first 15 days of the sales are the busiest so big savings can be expected during the first two weeks of July.

The small retailers, however, hope to able to tap into the tourist market this summer, especially on the busy cruise days when thousands of passengers come in to Palma.