Consumers did not offer much of a lift to the economy in July, according to new figures from the Central Statistics Office (CSO) showing a drop of close to 2 per cent in retail sales over the month.

The CSO said yesterday that the volume of retail sales, a measure which excludes the effect of pricing, fell back by 1.8 per cent between June and July.

July sales were flat on the same month of 2002. On a value basis, sales were 2.1 per cent higher in July than a year earlier, but fell by 1.4 per cent over the month.

When motor trades are excluded, the monthly volume decrease extends to 3.1 per cent, while the annual volume change showed a slight rise. The value of sales outside the forecourt was 2.5 per cent lower on the month, but 3.1 per cent higher on the year.

Economists said the overall picture was one of sluggish consumer behaviour. Retail sales account for about two-thirds of all consumer spending.

Volume data for the three months ending in June, which offer the most reliable indication of underlying trend, show that sales dropped by 0.7 per cent on the preceding three months.

A detailed breakdown of figures for June alone suggests that price reductions within summer sales have strongly influenced consumer behaviour, with sectors such as clothing and furniture exhibiting the most buoyant sales growth. Shoe sales were 12.2 per cent ahead of May.

IBEC's chief economist Mr David Croughan said sales patterns were based on a fragile consumer confidence that had not been boosted by summer discounting. But he said the July results could have been skewed slightly by sales starting earlier than usual in June.

Davy Stockbrokers expects consumer spending to grow by 1.5 per cent in 2003.