A fall-off in car sales from the enormous growth in the first few months of the year led to an overall drop in retail sales in July.

But mortgage lending continued to rise, up 2 per cent in August, leading to an annual growth rate of 17.9 per cent from 17.6 per cent in July.

Over the year from July 1999 to July 2000 the value of retail sales rose 13.2 per cent.

On a three-month basis - which is considered to be the most reliable - the volume of retail sales showed a 0.5 per cent increase.

Detailed figures are available only up to June where the largest increase was in sales of electrical goods, which were up 12 per cent.

The largest fall was in furniture and lighting, which was down 0.6 per cent.

Over three months, textiles and clothing were up 26 per cent, while pharmaceutical medical and cosmetics were up 19.2 per cent.

But food, beverages and tobacco were up only 3.2 per cent.

Mr Dermot O'Brien, chief economist at NCB Stockbrokers, pointed out that retail sales tended to be volatile.

"There is no sign in VAT or excise duties that things have cooled down. We will have to keep an eye on these figures over the coming months."

He added that car sales had been roaring ahead and at the end of the year would still be 40 per cent higher than last year at around 230,000 cars.

Sales were boosted by the demand for 00-registered vehicles.

Despite rising interest rates, the rate of credit and mortgage growth has shown little sign of abating, according to the latest figures from the Central Bank.

Lending by credit institutions increased by 26.4 per cent.

When exceptional items are excluded, however, it is up an adjusted 24.7 per cent from 21.9 per cent in July.