A survey that measures how consumers feel about the economy showed a drop in confidence last month.
The consumer sentiment index, compiled by KBC Bank and the Economic and Social Research Institute, declined to 59.4 in February from the two-year high of 64.6 seen in January.
This reversal is not surprising given that January saw a record monthly increase, according to KBC Bank Ireland chief economist Austin Hughes.
The results suggest that the trend is still improving, however the clear message from the survey is that Irish consumers remain extremely cautious, he said.
Consumer perceptions of the buying climate weakened sharply as post-Christmas sales ended and bills arrived. The decline in this element of the survey was responsible for about three-quarters of the drop in the index for last month.
Irish consumers also indicated that they were slightly less confident about the broad economic outlook and job prospects.
However, households said they were marginally more positive in relation to their spending power, despite recent cuts in welfare rates and public sector pay.
'It should be noted that consumers have adapted their expectations very substantially in recent years and the absolute level of the February 2010 reading still points towards a fairly downbeat Irish consumer,' Hughes said.
While the survey suggests the underlying trend in sentiment is improving, the improvement is modest, he said.
'It seems Irish consumers expect a year of unsteady progress at best.'
The weakening in Irish consumer sentiment last month mirrored drops in similar indicators in a number of other countries, including the US and Germany.
