Retail sales for Christmas are set to be the best since 2008, according to Retail Ireland, the Ibec group that represents the sector.

Retail Ireland is forecasting retail sales of €4.05 billion for Christmas 2015, up 3.5% over last year's festive period.

It said the momentum signalled by retail sales figures so far this year, combined with the expected impact of tax cuts in next week's Budget on consumer sentiment, will boost spending just in time for the crucial Christmas period.

"Consumer confidence remains high and indications are that Budget 2016 will again put more money back into consumer pockets," the group said.

Retail Ireland said that data for the first eight months of the year show solid growth across many retail categories.

The retail recovery continues to be dominated by furniture and home accessories outlets and computers and electronics operators, which saw growth of 9.6% and 5.8% respectively to the end of August compared to the same time last year.

Fashion and footwear stores, always a key barometer of consumer confidence, saw combined values rise by 5.8% in the year to the end of August, led by men's clothes and women's accessories, the Ibec group added.

But despite these positive figures, retail sales this Christmas are still expected to be 12.2% down on 2007 levels. This represents a drop of €550m or €330 per household.

"The fact that sales this Christmas will only be up 3.5% on the level of retail sales of Christmas a decade ago in value terms, despite rising costs and legacy debts, underlines the last decades status as a lost decade for the sector, " commented Retail Ireland.