The volume of retail sales increased by just over 8% in the month of July with a 5.5% lift in the value of sales.

On an annual basis, the rate of increase was 8.6% in volume and 5.9% in value.

However, if the motor trade is excluded, the volume of sales was down by 0.7% in the month, but an increase of just over 3% was registered in the annual figures.

Unsurprisingly, the sector with the largest monthly increase was the motor trade where volumes were up by 36%.

Books and stationery and electrical goods also recorded increases.

Furniture and lighting sales fell, as did fuel and other retail sales.

Philip O'Sullivan of Investec said the outcome was not surprising in light of figures from the Central Statistics Office showing a huge increase in car sales in July.

"Looking ahead, we expect to see a continued recovery in consumer spending in Ireland as employment recovers, the government’s austerity drive comes to an end and the savings rate reduces from its current elevated levels," he said.

Alan McQuaid of Merrion said the figures were higher than expected but, as anticipated, the bulk of the increase was driven by car sales.

"Consumer spending remains erratic on a monthly basis though on a year-on-year comparison it is well up on the same time last year, which is encouraging," he said.

"Although there is still a general air of caution among consumers, there seems to be a view that the worst is over following the downturn of recent years," Mr McQuaid added.

David McNamara of Davy pointed out that the more relevant trend in the figures was the strength of underlying sales given that the series provides the best steer for consumer spending.

"Overall, today’s data provide further positive evidence that consumer spending will contribute to GDP growth this year. We expect a 1.5% rise in consumer spending this year, accelerating to 1.9% in 2015," he said.