Retail sales increased by only 0.1 per cent in July compared to June, though when motor sales were excluded the figure rose to 2.2 per cent.
Most economists, in their response to the latest retail sales figures from the Central Statistics Office (CSO), commented that consumer spending remained strong and would be a key contributor to gross domestic product (GDP) growth this year.
Sales by volume were up 6.8 per cent in July this year when compared to July 2006, and this figure increased to 7.3 per cent when motor sales were excluded.
The value of retail sales increased by 0.4 per cent over the month, and by 7.9 per cent when compared with July of last year. Excluding motor sales, these figures increased to 2.8 per cent and 8.6 per cent respectively.
The category with the largest increase in volume of sales was textiles and clothing (6.4 per cent); the largest decrease was in motor sales (minus 3.1 per cent).
Alan McQuaid of Bloxhams said the "bottom line" was that spending on goods in the first seven months of 2007 was higher than the growth rate posted in the same period in 2006, and that this augured well for 2007 GDP growth.
Mr McQuaid referred to the effects of Special Saving Incentive Accounts (SSIAs) and said there was much anecdotal evidence that consumers were continuing to spend freely. "Indeed, we wouldn't be surprised to see some Northern Rock account-holders spending some of their safe funds as much in relief as anything," he said.
Consumer spending accounted for almost 50 per cent of GDP and would be a key contributor to growth this year, which "once again should be close to double the euro-zone average," he said.
Deirdre Ryan of Goodbody Stockbrokers said it appeared that Irish consumers were still "defying the negative sentiment that surrounds them". Viewed on a three-month moving average basis, she said, growth has slowed but was still impressive.
However, Pat McArdle of Ulster Bank said the slight increase was due more to base effects than sales buoyancy. He said the surprising thing about 2007 was the "virtual absence of any SSIA impact". He also noted that the bad weather had failed to stem the decline in pub drinking.
