Consumer sentiment improved marginally in March, the third monthly gain in a row.

The KBC Bank Ireland/ESRI Consumer Sentiment index rose to 60.6 in March from 57 in February to stand at its highest level since October 2011.

The index had stood at 59.5 in March 2011.

KBC said consumers are not quite as gloomy as they were at the peak of the euro zone debt crisis.

But it added that Irish consumers continue to see the obstacles that preclude a return to solid growth in economic activity and incomes.

It said the fact that the euro collapse did not happen last year is probably the key element in the recent improvement in sentiment.

A steady stream of new job announcements may also be playing an important role.

The index reveals that consumers' view of their household finances weakened for the third month in a row in March, due to the continuing pressure on spending power from a range of sources in the past year, including budget moves and higher fuel costs.

KBC said the buying climate fell to its lowest level in seven months, adding that there is ''still a pronounced lack of any 'feel good' factor among Irish consumers''.

''Consumers' experience of the past few years and the expectation of further significant austerity to come likely means their assessment of their permanent income has been significantly downgraded,'' KBC said.

The ESRI's Cormac O'Sullivan noted that there had been a marked decrease in the volatility of the index over recent months, which is likely a reflection of the greater stability in Europe after the successful restructuring of Greek debt.

''The March survey results suggest that while consumers detect some tentative signs of improvement in the economy as whole, there is little sense that this will translate into a clear improvement in their personal financial circumstances anytime soon,'' commented KBC Bank's chief economist Austin Hughes.

''Until a notably clearer upswing in activity and employment takes hold and promises the prospect of stronger household incomes, Irish consumer sentiment and spending are likely to remain subdued,'' he added.