Sales in the retail sector reached their highest level for more than a year in January, according to the latest data from the Central Statistics Office (CSO).
The figures, which offer the best indication of how willing consumers are to spend money, show that the value of retail sales in January was 8.8 per cent higher than in the same month of 2002.
Winter sales stimulated a 1.8 per cent monthly increase in retail activity between December and January. When motor sales, traditionally strong in the first month of the year, are excluded, however, the monthly growth was broadly flat at 0.8 per cent.
Analysts said the headline figures had also been flattered by the low sales recorded in the previous January as a result of the euro changeover. Mr Alan McQuaid, chief economist with Bloxham Stockbrokers, said 8.8 per cent amounted to "a one-month blip" and cautioned against expecting strong growth over the remainder of the year.
"I wouldn't read too much into the figures today," he said.
Volume figures, which exclude pricing factors, point to slightly more subdued annual growth of 4.7 per cent in January. Monthly growth on the volume measure was 1.9 per cent. When motor trades are excluded, volume was unchanged on the month.
On a three-month basis, which the CSO says offers a better indication of underlying trends, the volume of sales grew by just 0.4 per cent between November and January, when compared with the preceding three months.
Mr McQuaid is forecasting volume growth of 3 per cent for the year as a whole. While still well above low-growth EU states such as Germany, such a rate would bring Irish retail sales growth back to the levels recorded before the boom of the late 1990s.
Forecasts currently present problems, however, since the wider economic backdrop to retail sales will be largely dependent on the speed with which the US-led war in Iraq can be resolved. "If there's a quick resolution, I would expect a good decent number towards the end of the year," Mr McQuaid said.
Additional domestic drags on consumers' willingness to spend are evident, however.
"The reality is that consumers are gradually being hit with higher prices for a range of services," said Mr Jim Power, chief economist with Friends First.
