New figures show that the volume of retail sales rose slightly in October, but they indicate that consumer spending remained subdued.
The Central Statistics Office said the volume of sales rose by 0.1% in October compared with September, the first monthly increase since June. Sales are still down 3.8% compared with October last year, however.
The overall figure was boosted by 0.9% increase in motor salesin the month. Sales excluding the motor sector - which are closely watched by economists - fell 0.2% in the month and were down 3.6% over the year.
A breakdown of October sales showed a 1.7% increase in fuel, while furniture and lighting sales were up 1.3%. There were falls in most other categories, however, with bar sales slumping 3% and sales of books, newspapers and stationery down 2.8%. Bar sales have now dropped by 10.3% in the past 12 months, while books and newspaper sales are down 14.4%.
Sales at department stores dropped 1.9% in the month, while food sales were down 1.2% and electrical goods sales fell 1.7%.
The value of sales, which takes prices into account was unchanged from September, giving a 3.7% annual drop.
Bloxham economist Alan McQuaid said it was hard to be optimistic on consumer spending in the immediate future, with the top rate of VAT set to increase by two percentage points to 23% in next week’s Budget.
"Overall, we think headline retail sales will be down 1.6% on average this year in volume terms, with sales excluding cars forecast to be 3.5% lower than in 2010," he said.
Davy's Conall Mac Coille said there may be a temporary boost to sales in November and December as households brought forward spending to avoid the VAT rise. But he said the VAT rise would eat into spending power next year, and the outlook for sales remained bleak.
Juliet Tennent of Goodbody also hikes in the VAT rate would have further negative impacts on spending next year. She said Goodbody forecasts for a 1% fall in consumption next year following a 2% drop this year now look "somewhat optimistic".
Ulster Bank economist Simon Barry said the underlying trend remained very weak. He described the figures as disappointing given the bounce in consumer confidence that was reported in October. He said this indicated that the improvement in sentiment did not translate into any meaningful uplift in spending.
Retail Excellence Ireland said the figures continued to paint a bleak picture for Irish retail. It said retailers would be hoping that the traditional jump in sales in December would be boosted this year by the Government's decision to defer the two-point rise in VAT until January 2012.
