Retail sales activity dropped sharply in November although year-on-year growth remained robust, the Central Statistics Office (CSO) said yesterday. The latest seasonally adjusted retail sales index shows consumer spending fell in November by 1.5 per cent in value terms, while volumes were down 1.6 per cent.

But sales levels were still higher than in November 2005, rising 6.4 and 5.9 per cent in value and volume terms, respectively.

The monthly downturn was strongly influenced by motor sales, which performed badly in November, falling by 3.9 per cent on October levels.

Despite buoyant growth in clothing and textiles - 7 per cent ahead of October - activity was weak across most other sectors, Ulster Bank chief economist Pat McArdle said yesterday. "Six of the eight broad categories we follow fell, in some cases by up to 4 per cent. The only categories to buck the trend were pharmaceuticals, medicines and cosmetics, and clothing and footwear."

Recent consumer sentiment survey evidence suggests this subdued trend may have continued into December. According to the ESRI/IIB consumer sentiment index, consumers held back on spending last month over expectations that the Budget would improve their finances from January.

"The combination of rising interest rates and significant increases in utility bills suggests that the annual rate of increase in personal spending in the July-December period won't be quite as strong as in the first half of 2006," said Alan McQuaid, economist at Bloxham stockbrokers.

But he added that consumer spending was likely to pick up during 2007. "Around €10 billion in SSIA funds is set to mature in the coming months. While much of the proceeds are likely to go into alternative savings products, debt reduction or puchases of property, it seems likely that some portion will be spent on consumer goods."