Consumer sentiment registered a steep fall in December, dropping to its lowest level in a year, due to Budget-related concerns.

The latest KBC Bank Ireland/ESRI Consumer Sentiment Index fell to 49.8 from 63.8 in November.

The drop followed recent trends of weakening consumer sentiment in December after each year's Budget is delivered at the start of the month.

People tend to downgrade their outlook for their household finances as they assess the impact of the Budget measures.

KBC economist Austin Hughes said the figures emphasise the fragile condition of consumer confidence and the fact that the average consumer continues to face major pressures on their spending power and uncertainty about their future.

However, he added that the December drop ''hugely exaggerates the change in the circumstances of the average Irish consumer of late''.

He said there is little doubt most people felt that Budget 2013 would leave them worse off financially, which prompted the ''outsized'' fall in sentiment last month. While broadly similar drops were seen in December 2010 and 211 on similar concerns, the economist said that reports of the ''harshest budget ever'' resonated strongly with consumers.

The sharpest deterioration in sentiment was seen in relation to consumer assessments of how their household finances would fare during 2013. The number expecting an improvement shrank from 13% to just 6%, while the number that predicted their finances would weaken jumped from 49% to 65%.

KBC said the weakness of the December reading also appears at odds with several reports which suggest that retailers saw buoyant spending over the key Christmas period. This could be due to the timing of the survey - about 80% of the responses were taken between December 3 and 11. The sentiment survey usually reflects changes in confidence between the first two weeks of the month, while retail reports tended to signal an improvement in the second half of December.

''The downturn in consumer sentiment in December may exaggerate the degree of weakness likely to be seen in the coming year, but recent positive retail sales reports may equally overstate the likely trajectory of Irish consumer spending in 2013,'' Mr Hughes said.

But on a brighter note, consumers were marginally more upbeat about prospects for the jobs market on the back of a range of jobs announcements.