RETAIL SALES:RETAIL SALES reached a 24-year low in August, as declining car sales and a significant fall-off in the demand for household furnishings saw the overall volume of sales fall by 6 per cent.

That is the largest annual decline since February 1984. The value of retail sales also decreased in the year to August 2008, falling by 3.4 per cent.

If motor trades are excluded from the overall annual rate, then an annual decrease of 5.5 per cent would have been recorded. This is the largest annual decrease since April 1988, which was also 5.5 per cent.

Alan McQuaid, chief economist with Bloxham Stockbrokers, described the results as "extremely disappointing". He said a number of factors had contributed to weak consumer spending this year, including high consumer price inflation which has eroded disposable income growth, as well as the ongoing weakening of the labour market.

National Irish Bank chief economist Ronnie O'Toole says the scale of the decline is in line with that of other countries with weakening property markets, notably Spain.

He said the downward price trend was expected to continue next year, particularly for food products. The weak retail sales were contributing to lower VAT receipts for the exchequer, which would make next week's budget more difficult to construct.

In August, the volume of sales fell by 2.7 per cent from the previous month, while the value of sales dropped by 3 per cent. The sales figure has now dropped for the seventh time in eight months, with the only increase this year recorded in May.

With the housing market at a standstill, the largest decrease in sales was recorded, unsurprisingly, in the furniture and lighting sector, where preliminary estimates for the month of August show that the volume of sales declined by 20 per cent, and the value of sales dropped back by 20.7 per cent. The bounce in car sales that followed the introduction of the new Vehicle Registration Tax regime on new cars in July petered out in August, with car sales falling 6.8 per cent in the month and to minus 7.3 per cent for the year.