Retail sales fell by 2.9 per cent in August, their sharpest monthly decline this year, on the back of a drop in car sales.
However, when the volatile motor sector is excluded, retail sales rose by 0.3 per cent on the previous month, suggesting recovery in core sales is continuing.
In addition, the latest figures from the Central Statistics Office (CSO) show retail sales have risen by 6.8 per cent on an annual basis.
The sector with the largest monthly decrease in August was motor trades, where sales fell by 4.4 per cent.
This follows an unprecedented 36 per cent jump in July when the new 142 registration plates came in.
Sales of hardware, paints and glass also fell 2.6 per cent in August while sales in the sector covering food, beverages and tobacco dropped 2.4 per cent.
Conversely, the sectors with the largest monthly increases were furniture and lighting, which rose 11 per cent, bars (2.6 per cent) and electrical goods (2.2 per cent).
Sales of furniture and lighting are up 20 per cent on annual basis while electrical goods are up 11 per cent - both of which are linked to recovery in the housing market.
While retail sales volumes are continuing to recover, deflation continues to impact on the value of retail sales.
Only two categories - books and newspapers; and bars - recorded price increases on an annual basis, with the other ten categories recording price declines.
As a result, there was an annual increase of 5.3 per cent in the value of sales, and a monthly decline of 1.3 per cent.
Alan McQuaid of Merrion Stockbrokers said consumer spending remains erratic on a monthly basis though on a year-on-year comparison “it is well up on the same time last year, which is very encouraging”.
“There have been clear signs of stronger personal expenditure, particularly in relation to new cars, concert tickets and online internet shopping. Although there is still a general air of caution among consumers, there seems to be a view that the worst is over following the downturn of recent years,” he said.
Goodbody economist Dermot O’Leary said the prospect of income tax cuts in next month’s budget was likely to see “this modest recovery” continue, despite the ongoing drag of a large debt overhang.
The Irish Small and Medium Enterprises Association warned, however, that Government expectations of job increases in the retail trade are in the Government’s own hands and called for the reversal of the doubling of PRSI from 4.25 per cent to 8.5 per cent, which, it said, has curtailed staff recruitment and led to some lay-offs.
