CORE RETAIL sales rebounded in January following severe weather conditions in December.

According to the Central Statistics Office, the volume of sales, excluding the volatile car industry, grew by 2.7 per cent in January. This reversed the monthly decline in December to leave the volume of sales at the same level as November on a seasonally adjusted basis.

The figures suggest that large tax increases introduced in the December budget may not have had an across the board impact on consumer activity.

Core retail sales, when measured by value rather than volume, increased by 2.6 per cent in January on December.

As the chart illustrates, the value of retail sales has fallen more sharply than volume levels over the course of the recession, reflecting the falling prices of many consumer goods.

Over the past year, however, the two series have ceased diverging. This reflects an end to the pattern of price deflation in 2008-09. In 2010, consumer prices rose very slightly over the course of the year.

When car sales are included in overall retail sales, the picture in January was starkly different. A large monthly decline in car sales dragged the overall index down.

In volume terms, total retail sales fell by 3.8 per cent month on month. By value, the decline over the same period was 1.5 per cent.

Although large compared to other sub-sectors, the December-January fall in motor sales was far less marked than over the past two years. This provides further evidence of the limited impact of income taxes on consumer behaviour. The only other sub-sector in the retail business to register a month on month decline in January was department stores.

A 12 per cent fall is by far the largest December-January fall since comparable figures were first compiled in 2005. The figure appears anomalous and may be explained by one-off factors.

Apart from department stores and cars, all 11 other sub-sectors in retailing registered upticks on snow-affected December. The strongest monthly rate of growth was recorded in the furniture and lighting sub-sector. Sales in the sub-sector grew by 9.3 per cent on the month.

This does not, however, appear to herald a rebound in an area that has been hard hit by the property collapse. The increase in January did not offset the monthly decrease in December.

The volume of furniture sales in January stood at almost half its monthly peak, recorded in June 2007.

In 2010 as a whole, the volume of retail sales grew marginally, by 0.9 per cent. This was the first annual increase since 2007. In 2009, a 14 per cent decline was recorded after a 6.1 per cent fall in 2008.

Excluding cars, the volume of sales fell by 1.7 per cent in 2010. This followed full-year falls of 6.8 per cent and 2.8 per cent in 2009 and 2008 respectively.

The CSO also published comparable retail sales data from other EU economies yesterday. The most recent figures relate to December. Of the 20 countries for which figures are available, five recorded larger volume declines in year on year sales. The largest decline was recorded in Romania (9.4 per cent), followed by Spain, Malta, Bulgaria and Slovenia.