THE VOLUME of retail sales fell by 0.8 per cent on an annual basis in November, but inched higher on a month-on-month basis.

Retailers saw the volume of their sales rise by 1.6 per cent last month compared with October, as consumers bought more clothing, footwear, furniture and electrical items.

However, this was partly offset by a fall in the sales of fuel and pharmaceuticals and a decline in sales at bars.

Sales at department stores fell by 5.4 per cent compared with a year earlier, although there was a 0.5 per cent rise compared with October.

Excluding car sales, the volume of retail sales rose by 1.8 per cent on a monthly basis, while the annual figures remained the same.

The value of retail sales rose by 1.1 per cent in November compared with October, while the annual figure fell by 0.7 per cent.

“While these latest figures would suggest some underlying improvement in consumer spending, we wouldn’t read too much into the data as you would expect shopping to pick up in the run-up to the Christmas period,” said Bloxham chief economist Alan McQuaid.

“Furthermore, the news that the top rate of VAT was going to be hiked by two percentage points to 23 per cent in the December budget may also have prompted some consumers to shop early and buy ahead of the indirect tax increase.”

Other analysts were equally cautious.

“Given that much of the public discussion in November would have centred around the impending budget and wider euro concerns, the performance is all the more impressive, but we fail to see that this is the beginning of a trend,” said Goodbody chief economist Dermot O’Leary.

The retail sector has been hit hard by the ongoing economic difficulties, as consumers save more and spend less in anticipation of a deterioration in their financial circumstances.

Consumer morale has been hampered by the problems facing the economy, with sentiment weakening as the euro crisis continued and the budget loomed at the start of the month.

Data for November showed consumer sentiment, although above the average for the past year, declined during the month. That came after a surprise bounce in October.

The Irish Small and Medium Enterprises Association (Isme) called on consumers to “buy Irish” over the festive period.

“The last 12 months have been exceptionally difficult for the retail sector, with retail volumes and values down almost 1 per cent,” said Isme chief executive Mark Fielding.

“If every consumer switched just one-tenth of their ‘imported shopping’ to Irish- produced quality goods it would go a long way to sustaining Irish jobs after what has been a very difficult year. The transfer of every €10 will generate an extra €24 in the local economy, which illustrates the effect of purchasing power.”

October’s retail figures failed to show any seasonal bounce for the sector, with core sales falling 0.2 per cent compared with September. Compared with last year, core retail sales were 3.6 per cent lower in terms of volume. Value was 3.7 per cent lower than last year.

Ibec group Retail Ireland said the latest figures showed the continued weakness of the sector.

“Retailers around the country are reducing prices despite the fact that rents remain sky high and the cost of doing business climbs ever upward,” said Retail Ireland director Stephen Lynam.

“We wait to see how sales in the pre- and post-Christmas period shall turn out, but consumers are unlikely to spend in any great numbers given the cloud of economic uncertainty that remains.”