Record retail sales point to an economy which is continuing to accelerate and growing at double digit pace.

Sales for the month of April were up 21.6 per cent in value terms and some 17.2 per cent in volume terms compared to the same month last year as consumers continued to spend the proceeds of recent tax cuts and pay increases.

The figures, released by the Central Statistics Office yesterday, are likely to be boosted further when pay increases under the partnership for Prosperity and Fairness take effect this month.

On a three month basis - which gives a more stable indication of underlying trends - the volume of retail sales from February to April rose 7 per cent compared with the previous three months ending January 2000.

In the three months to the end of March, the volume increase was 9.8 per cent, of which car and motor sales was the largest component, up 26.7 per cent.

The retail sales index, which measures spending on food, drink, cosmetics, pharmaceutical products, clothing, footwear, furniture and lighting, electrical goods and hardware, as well as books and newspapers, has been steadily increasing this year.

Increases were running between 9 per cent and 15 per cent last year but each month since January has seen the figures rise by between 16.7 per cent and April's record 21.6 per cent.

Mr Dermot O'Brien, chief economist at NCB Stockbrokers, described the cumulative figures for the first three months as "almost scary" but said sales may calm a little through the summer months.

"There is certainly no let up in demand and it looks as if the economy is still accelerating," he added.

But he warned against reading too much into one set of figures and said it was important to wait a month or so for the trend to be confirmed. Car sales for the first months of the year contributed strongly to the growth as consumers rushed to buy 00-registered cars but that factor should slow as the year progresses.

Mr Austin Hughes, economist at Irish Intercontinental Bank, said the figures pointed to a double digit increase in growth this year, although many of the goods sold were imports.

On a positive note, the figures do not point to rapidly accelerating inflation as competition in most of the main sectors appears to be keeping prices down.

This suggests a degree of price awareness among consumers as well as intense competition in retailing. Inflation, however, will feed through in non-traded areas not affected by infinite supplies from world markets - for example eating out or hairdressing.

Figures released by the Central Bank yesterday also showed mortgage lending continuing to rise, although general lending slowed somewhat in May. Residential mortgage lending to Irish residents rose by €515 million or 2 per cent. The annual rate of growth increased to 20.4 per cent from 20.2 per cent the previous month.

The unadjusted rate of growth in credit fell for the third consecutive month to 26.4 per cent from 28.6 per cent in April. Excluding lending to IFSC companies, the underlying rate fell to 24.5 per cent from just more than 26.5 per cent in April.

However, according to Mr O'Brien, recent figures have been distorted by the merger of Irish Life and Irish Permanent.