The value of retail sales in the Republic fell by 0.3 per cent in February compared with the previous month, in further evidence that the economy is slowing down.

Provisional figures from the Central Statistics Office (CSO) showed a year-on-year rise of 7 per cent in February, although this was down from 7.5 per cent in January and nearly 10 per cent in December.

The volume of retail sales increased by 4 per cent in February 2001 compared with the previous February.

On a three-month basis, which gives a more stable indication of recent underlying trends, the December 2000-February 2001 volume figures show a 1 per cent decrease compared with the three months ending November 2000.

The largest increase in the volume of sales - 9.7 per cent - was in the pharmaceuticals, medical and cosmetic articles sector. The motor trades sector recorded the largest decrease in volume at 9 per cent.

"The main thing sapping retail sales has been the fall-off in car sales. That is the key weakness. Last year's car sales were phenomenal and couldn't continue at that rate. Underlying domestic demand is still good," said Mr Dermot O'Brien, chief economist with NCB Stockbrokers.

He said the figures showed that the economy was slowing down to a more sustainable level.

"But there's no reason to believe it's the beginning of the end and the economy is going to crash into recession," said Mr O'Brien.