The growth in retail sales in March declined marginally on the previous months, although economists said they were encouraged by the continuing upswing in consumer spending.

Figures released by the Central Statistics Office yesterday showed that the volume of retail sales increased by 4.6 per cent in March when compared with the same month last year, although there was a monthly decrease of 1.2 per cent. Excluding motor trades, the annual increase was 3.9 per cent and the monthly change was down by 0.9 per cent.

The figures also reflected a 5.6 per cent increase in the value of retail sales in March on the same month in 2004. Excluding motor sales, the annual increase was 4.3 per cent and the monthly change was down 0.9 per cent.

The figures also indicate that the 7.6 per cent growth in the volume of sales in the Irish market in February was fastest in the euro zone, where the average growth was only 0.8 per cent. This rate of growth reflected all businesses excluding motor trades and bars.

Bank of Ireland economist Dr Dan McLaughlin said that spending had picked up noticeably in the year to date, helped by an expansionary budget, low interest rates, an upturn in consumer confidence and falling inflation.

"Consumer spending may rise by 5.5 per cent in volume terms this year, the best performance since 2000, with an acceleration to 7 per cent as the SSIAs begin to come on stream," he said.

Goodbody economist Philip O'Sullivan questioned suggestions that the fall in pub sales was due to the smoking ban. "We believe that the fall is primarily due to Irish consumers switching their consumption patterns in response to the high levels of inflation that have been observed in this category."

A series of figures for December 2004 to February 2005 show that the largest volume increase on the previous three-month period was in motor sales, which rose 7.7 per cent.

"Motor trades have made a bright start to 2005 and were ahead by 10 per cent year-on-year in March. This is partly due to a recovery from the slowdown in motor sales in the second half of last year but, nevertheless, it is encouraging to see that big-ticket items are performing strongly, as this demonstrates the continued buoyancy of consumer demand," Mr O'Sullivan said.