Irish consumer sentiment plunged five percentage points in February as the effects of January sales faded and a deal to restructure a 30 billion euro government debt failed to boost confidence, a survey showed on Tuesday.
The KBC Bank Ireland/ESRI Consumer Sentiment Index fell to 59.4 in February from 64.2 in January, the latest of a series of sharp swings.
The index remains well ahead of a 14-month low of 49.8 in December and well below a two-year high of 70 seen in August. The three-month moving average decreased to 57.8 from 59.3.
"The decrease in sentiment was expected due to the end of the January sales period. However, all categories of the index fell relative to January," said Kevin Timoney, an economist with the Economic and Social Research Institute.
A deal struck by the government to reschedule the payment of around 30 billion euros (25 billion pounds))of promissory notes came in the middle of the reporting period and may have more of an impact next month, he said.
The government has promised voters that the deal to ease the burden of its bank debts will cut by 20 percent the 5.1 billion euros of austerity measures planned by 2015.
The report's authors said the effects of the deal may have more of an impact in March, but warned any upside would be modest.
"It is not particularly surprising that the deal on the promissory notes had a positive impact on sentiment or that this impact was relatively modest," said Austin Hughes, economist at KBC Bank Ireland.
"The Irish consumer is seeing an improvement in ‘macro' conditions across the economy but their personal finances remain under pressure," he said.
The survey's index of consumer expectations based on consumers' perceptions of their future financial situation, decreased from 54.4 in January to 50.0 in February.
The index of current economic conditions fell to 73.2 in February from 78.8 in January.
(Reporting by Conor Humphries; Editing by Catherine Evans, Ron Askew)