THE VOLUME of retail sales rose marginally last month compared with February as more consumers bought cars, while bar sales also increased.

But experts warned against too much optimism, as annual sales continued to slide, falling 1 per cent.

Department stores were hit hard over the year, with sales slumping 5.5 per cent. The volume of furniture sales was also lower, down 6.5 per cent annually, while hardware and paint was down 9.3 per cent over the same period.

The monthly figures showed overall growth of 0.2 per cent, with motor sales rising 4.1 per cent and bar sales up 3.5 per cent. When the effect of the motor trade was excluded, the growth was 0.3 per cent, while annual sales were down 1.7 per cent.

On a monthly basis, sales of electrical goods fell 4.2 per cent, and pharmaceuticals were down 1.6 per cent.

In the first quarter of 2012, sales were down 2.1 per cent, with core sales declining 1.3 per cent when the motor trade was excluded. That compared with a 1.6 per cent and 1 per cent rise respectively in the final quarter of 2011.

Davy chief economist Conall Mac Coille noted the quarterly decline, attributing it to spending being brought forward to avoid the VAT rise in January.

“As we expected, the 0.5 per cent rebound in consumer spending in the fourth quarter appears to be a false dawn,” he said. “We still expect Irish consumer spending to contract by 1.7 per cent in 2012 given weak employment growth and nominal pay.”

The value of retail sales was slightly higher on the month, growing 0.6 per cent, but dipped 0.4 per cent over the year. Stripping out the effect of the volatile motor industry, the value of retail sales grew 0.8 per cent on the month and fell 0.7 per cent over the year.

Retail Excellence, which represents shop owners, warned the 2 per cent VAT increase was making life tougher.

Chief executive David Fitzsimons said: “There is also a strong feeling that the constant flow of announcements about new charges, combined with the uncertainty over the upcoming referendum, is helping to keep consumer sentiment on the floor.”

Bloxham’s Alan McQuaid said consumers needed incentives to spend.

“But at least the recent appreciation of sterling versus the euro should help to mitigate cross-Border shopping flows and provide some support to domestic spending, and lower interest rates too will help ease the pain of higher taxes to some degree and potentially boost consumption,” he said.