Retail sales growth started the year robustly, driven by a surge in new car sales, retail sales figures suggest. When adjusted for seasonal factors, sales rose by 4 per cent in January compared to December.

Excluding motor sales, however, sales rose by just 0.3 per cent in the month. Volumes were 7.3 per cent higher in January than a year before. This compares with a growth rate of 6.2 per cent achieved for the full year of 2006, the strongest full-year performance since 2000.

Recent consumer sentiment evidence from Irish Intercontinental Bank (IIB) suggests that consumers postponed purchase of big ticket items in December in anticipation of post-Budget income tax reductions. Volume growth for motor vehicles was strong at 6.7 per cent.

Categories of goods associated with lower but still significant expenditure levels also grew strongly, with hardware, paint and glass sales volumes up 17.5 per cent in the month, and electrical goods sales up 9.1 per cent.

The figures showed consumers had recovered from last year's interest rate rises, Alan McQuaid of Bloxham stockbrokers said.