Cars fly off forecourt and retail sales up as prices fall
Sales in shops, car showrooms and bars rose strongly in July.
Shoppers have been boosted by price falls due to the weakness of sterling.
Retail sales were up 11.9pc for the month of July, with the annual increase of 2.1pc, official figures show.
The surge was largely driven by a rise in car sales.
The figures from the Central Statistics Office also show prices falling.
Retail prices fell by 3.5pc in the year to July, the sharpest rate of decline in seven years. It reflects the euro's strength against sterling.
Around a third of imported consumer goods come from Britain.
The strength of the euro against sterling is helping the real incomes of Irish households, according to economist with Davy Stockbrokers Conall Mac Coille.
But retailers complained that the fall in sterling was squeezing their profit margins.
Retail sales were strong even when surging motor sales are excluded.
The annual rise in retail sales was 7pc when motor sales are excluded, the CSO said.
Along with a strong rise in motor sales, clothing, footwear and textile volumes saw increases.
Sales in bars, meanwhile, were up 2.6pc on the month.
But there were falls in the volume of sales in non-specialist stores, and in sales of books and newspapers and furniture and lighting.
A recent report from property firm Savills Ireland showed bars are the only retailers experiencing both sales growth and rising prices.
The Savills study of the retail sector indicates retailers outside the bar sector are experiencing sales growth, but this is coming at the expense of discounted prices.
Alan McQuaid, economist with Merrion Stockbrokers, said retail sales remain erratic on a monthly basis, but the underlying trend is positive.
He said most attention has been on car sales in the past couple of years, but personal spending in other areas has picked up over the same period and is becoming more broad-based.
"Despite the weakness in sterling, which has enticed some shoppers to spend in Northern Ireland, retail sales in the Republic have held up reasonably well," said Mr McQuaid.
He said VAT receipts for the year to date are running ahead of official Department of Finance expectations.
However, with the pound now more than 90p to the euro and showing no immediate sign of recovering, the worry for retailers is that more and more shoppers will head North between now and year-end, Mr McQuaid said.
Small firms group Isme welcomed the improvement in value and sales.
But the association said retailers were being squeezed by the fall in the value of sterling.
It called on the Government to use Budget 2018 as an opportunity for the retail sector.
Isme chief executive Neil McDonnell said: "As sterling continues to depreciate, the retail sector is particularly vulnerable to price squeeze, with consumers looking to online UK retailers for goods. This is a cause for real concern."
He said the retail sector plays a crucial role in the Irish economy, employing 285,000 people across the country.
Economist with Goodbody Stockbrokers Dermot O'Leary said deflation is boosting household spending power.
He said the lower value of sterling has had the effect of reducing prices on the high street.