Retail sales enjoyed their best performance in the third quarter for more than eight years, rising 5.4 per cent in volume terms, according to a review of the industry by Retail Excellence Ireland (REI).

Hot beverages, “always a good barometer of footfall and consumer activity”, enjoyed the highest gains, with sales volumes rising 13.5 per cent in the three-month period compared to the quarter last year.

The review includes sales data for more than 4,000 stores and is conducted for REI by researchers GfK. It found that the increase in retail sales in the third quarter was the largest since the second quarter of 2007.

Almost all major sectors of retail rebounded.

"The notable exception was grocery which continues to track behind the industry average due to intense competition and continued price deflation," said REI chief executive David Fitzsimons.

Like-for-like sales in grocery, or sales in stores that were open for more than a year, fell 0.37 per cent, the REI study found. The worst performing category measured in the study was digital cameras, where volumes fell 25 per cent.

Margins across the board remain under “extreme pressure”, Mr Fitzsimons said.