INFLATIONARY pressures are still being kept under control despite stronger than expected retail sales in February, according to the latest statistics from the Central Statistics Office.

Irish retail sales fell a provisional, seasonally adjusted 0.3 per cent in February, giving a year on year increase of 7.2 per cent. However, the January figure was revised up to 3.9 per cent from 3.7 per cent after strong January sales. Figures late last year were also substantially revised, giving a stronger picture.

In value terms, February retail sales fell to 7.2 per cent from 7.6. Volume figures are not yet available but analysts expect them to in around 5 per cent from 5.4 per cent in January.

Mr Han de Jong, chief economist at Goodbody Stockbrokers, said he now expected March retail sales volume to come in around 7 per cent. "According to SIMI (the Society of the Irish Motor Industry), car sales were up 35 per cent in March from last year and retail sales were weak in March last year, so volume should show an increase to 7 per cent", he said.

Easter fell earlier last year which explained the probable stronger March figures this year, Mr de Jong said.

Output prices rose 0.2 per cent in March and 1.9 per cent from a year ago. However, the home sales component, which most analysts keep a close eye on, fell back to 2.9 per cent from 3.2 per cent in January and 3.9 per cent in the second half of last year.

Analysts now expect this to fall to 2 per cent next year. Part of the reason for this is the strong food price increases recorded in the second quarter last year as the pound fell against the ECU, analysts said.

As a result, Mr de Jong now expects growth for 1996 to reach 8 per cent. At the same time inflation was remaining remarkably subdued, he said.