Retail sales rose 12.6 per cent in July compared to the previous month on the back of a huge rise in car sales as the 162 registration plates came into operation.

Sales were also up 6.3 per cent versus July 2015, new Central Statistics Office (CSO) figures show.

However, once sales of motor cars are excluded, retail sales declined by 0.5 per cent from June to July and were up 2.7 per cent on an annual basis.

The figures show sales of vehicles rose 12.5 per cent last month, while furniture and lighting-related purchases increased 5.3 per cent. Sales of books, newspapers and stationary were up 2 per cent during July.

The biggest decline in retail sales was in clothing, footwear and textiles, down 2.5 per cent.

Erratic

"Although retail sales remain erratic on a monthly basis, the underlying trend is still positive. While most attention was on cars last year and will be again in 2016, personal spending in other areas has generally picked up in recent months and is becoming more broad-based. This can only be good news for retailers and employment prospects in the sector," said Alan McQuaid, chief economist at Merrion Capital.

“We think that headline retail sales volume growth for the year as a whole will still be in the region of between 6.5 per cent and per cent, albeit down from 8.2 per cent in 2015,” he added.

The value of retail sales increased 4.5 per cent on a monthly basis and up 3.9 per cent versus July 2015. Once car sales are excluded, the value of sales dropped by 0.5 per cent on a monthly basis and was up 0.8 per cent versus the same month a year earlier.

Business group Isme said rising costs was a big concern for retailers. It called on the Government to do more to address the increasing cost burden on retailers, in insurance, rents and local charges.