Figures from the Central Statistics Office (CSO) show the volume of retail sales fell by 0.1% in December compared with November on the back of weak car sales.
The CSO said there was an annual decrease of one percent, the biggest fall in five months.
However, when motor trades are excluded, the volume of retail sales rose by 0.8 percent in December from November. There was an annual increase of 0.8 percent.
Department store sales saw increases of 6.3 percent last month, with bars sales up 4.4 percent and books, newspapers and stationary sales rising 3.4 percent.
The sectors which saw the biggest declines were furniture and lighting, which were down 7.1 percent, and other retail sales, which fell by 3.1 percent. The CSO noted that car sales were down 22 percent in December compared to the same time in 2011.
Merrion economist Alan McQuaid said that although the December numbers were a bit of a let-down, the overall performance in the fourth quarter was positive. He suggested that the fall in personal expenditure in goods and services for 2012 as a whole and the drag on national output will not be as weak as originally thought.
He said that consumers currently remain ''very picky'' and are spending mainly on things that appeal to them.
Despite the economic and fiscal headwinds, retail sales performed relatively strongly in the second half of last year, with core retail sales now in positive territory on an annual basis in both volume and value terms for five successive months, NCB economist Emmet Gaffney noted.
''That the positive underlying trend in core retail sales remained intact in December tallies with positive noises from the industry regarding trading over the Christmas period,'' he added.
''The annual increase in December 2012 against December 2011 is a welcome development especially in a month where a significant proportion of a retailers annual turnover is transacted,” commented Excellent Retail Ireland's David Fitzsimons.
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