Official figures show that consumer spending was still weak in March, despite a pick-up in the motor sector.
The Central Statistics Office said the volume of retail sales rose by 1.3% from February, but this was mainly due to a recovery in the motor trade sector - which includes repairs and petrol stations as well as cars. Sales were still down 17.9% compared with March last year.
When the motor trade was excluded, the volume of sales fell by 2.2% in the month and 8.2% over the year.
Recent retail sales figures have been badly affected by the slump in car sales in the early months of this year. The motor sector usually accounts for around a third of all sales in the early months of the year.
The CSO said that the total volume of sales in the first quarter of the year showed a drop of 21.6% from a year earlier - the biggest on record - though the fall was 7.8% when motors were stripped out.
A breakdown of the March figures showed a monthly rise of 8% in motor sales, but clothing and footwear sales dropped 6.2%, while furniture sales were down 8.5%. Electrical goods sales were 5.8% lower. Bar sales rose by 2% in the month.
More job losses in retail sector predicted
Retail Ireland, the IBEC that represents the Irish retail sector, predicts that 25,000 more retail staff will go on the Live Register this year.
It says it sees consumer spending falling by about 9% due to the impact of the two budgets, cross border shopping and the recession generally.
It calls on the Government to reduce VAT to 18% for a specific period to stimulate retail sales and to reduce the excise levels on alcohol. It says that alcohol is the single biggest motivation for cross border shopping trips.
Bloxham economist Alan McQuaid says that while spending on the 'high street' seems to be holding up reasonably well, the same cannot be said for overall consumption that continues to be weighed down by collapsing car sales.
However, he says that as the pace of the contraction slows over the coming months the economy should see a pick up in consumer sentiment as signs of a recovery start to emerge.
Ulster Bank economist Lynsey Clemenger says that it is a welcome positive that the two main drags on the Irish economy, namely construction and consumer spending, appear to have passed their low points.
'However, given the uncertainty surrounding the timing of the global recovery, and with unemployment set to rise sharply in coming months, we maintain our view that it will be some time before any seeds of recovery become green shoots,' she added.
Factory gate prices edge higher
Separate CSO figures showed that factory gate prices - prices of goods before they reach consumers - rose by 0.1% in April from March. This meant there was an annual increase of 4.7%.
A breakdown of wholesale prices showed that prices of building and construction materials dropped 0.4% in the month and have fallen by 3.1% over the year.
Prices of energy products rose by 1.8% in the month, while petroleum fuel prices jumped by 7.9%.
