Irish people are going to spend some €720 more in December than any other month of the year.

That is according to Retail Ireland, the IBEC group that represents the retail sector.

It has published its Christmas Retail Monitor 2016, which predicts the Irish household will spend an average of €2,587 this month, approximately €720 - roughly €26 more than Christmas 2015.

The monitor finds that despite challenges in the market, retailers remain positive.

It predicts an increase of 3.7% in consumer spending this December compared to last year, with total sales of €4.21bn, up from €4.05bn in 2015 - an increase of €160m.

"The challenge for Irish retailers this Christmas will be to ensure that this buoyancy is felt locally and that Irish based retailers benefit from this additional spending," the report says.

The monitor tracks key trends across the economy and sector to give an insight into how they are likely to impact the key Christmas trading period.

Key indicators point to retail prices remaining low, with aggressive competition between retailers driving prices down.

Consumer prices have fallen every month since the Brexit vote as currency shifts influence retailers pricing strategies.

The latest Central Statistics Office (CSO) data indicates that goods prices are down 2.9% year-on-year in Q3.

"New Year sales bonanza"

"Downward price pressures will continue into the post-Christmas sales period", Retail Ireland says.

Retail sales in the first ten months of this year are up 1.6% in value terms on the same period in 2015.

While prices are falling, there has been a significant rise in disposable income across the economy.

Gross disposable income was up 1.8% in the first half of 2016 - having grown 5.3% in 2015.

"With goods prices in the first 10 months of 2016 down 8.5% on the same period three years ago and the labour market continuing to improve, consumers should be in a stronger position to spend when compared to last Christmas," it adds.

While more people in work this Christmas is good news for retailers.

In Q3, the employment market reached over two million people - the highest level of employment recorded since Q4-2008.

The numbers employed are now expected to be 2.9% higher this Christmas compared to last.

The Retail Monitor also highlights significant growth in e-commerce transactions as we approach Christmas.

Central Bank statistics show that e-commerce transactions recorded on Irish debit and credit cards jumped by 20% from €1bn to €1.2bn between July and September as the value of sterling fell.

This was way above trend and is likely to be tracking the currency shift. This growth is likely to continue into the Christmas period.

Retail Ireland Director Thomas Burke said: "The next few weeks are by far the most important trading period of the year.

While retail sales growth has softened in recent weeks, retailers remain optimistic.

More people at work, a rise in disposable incomes and falling prices should lift the consumer mood and translate into increased sales.

Currency pressures and a drop in consumer sentiment have made recent months difficult for many retailers. But the retail sector's challenge is the consumer's opportunity.

"The coming weeks will see heavy pre-Christmas discounting, and a New Year sales bonanza."