The volume of retail sales rose by 0.7 per cent in July as hardware, fuel and textile businesses recorded a modest increase in trade.

However, the latest Central Statistics Office (CSO) data showed retail sales continued to fall on an annual basis, declining by 1.5 per cent year-on-year as the sector remained in the doldrums.

Separately, a KBC Ireland/ESRI survey showed a marked increase in Irish consumer sentiment in August which reached its highest level in almost five years as pessimistic views about the economy abated.

The  index rose to 70 in August, up from 67.7 in July. Seven months out of last eight have now increased.

The CSO figures showed the volume of retail sales, excluding the volatile motor trade, increased by 1.1 per cent in July compared with the previous month, while there was an annual decrease of 0.5 per cent.

The sectors with the largest monthly volume increase were clothing, footwear and textiles (+5 per cent); hardware, paints and glass (+4.5 per cent); and fuel (+3.8 per cent).

A monthly decrease was seen in electrical goods (-1.9 per cent); bar trade (-1.7 per cent) as well as books, newspapers and stationery (- 0.9 per cent).

The figures showed the value of retail sales rose by 0.9 per cent in July following a drop of 1.5 per cent in June. This was the first monthly rise in the value of retail sales sine March. However, the annual change remained in the negative at -1.6 per cent.

Retail Excellence Ireland chief executive David Fitzsimons welcomed the increase in sales but warned the industry continues to be in a state of great distress".

He said budget speculation is killing consumer sentiment. "We would ask the Government and media to refrain from any budget commentary until it is necessary to do so," he said.

The Irish Small and Medium Enterprises Association said the lack of consumer confidence was crippling the retail sector.

Isme chief executive Mark Fielding said: “The retail industry, with excess capacity, reduced consumer spend and rising government influenced costs has been attempting to adjust its cost base in the changed economic conditions.

“However the biggest costs to retailers, such as inequitable commercial rates, unrealistic rents and uncompetitive labour costs have remained stubbornly high. These costs, together with recent transport fuel increases continue to make life hell for SME retailers, who, due to pathetic government inaction, will result in more closures and job loses," he said.