There was a sharp drop in consumer confidence last month, which economists say is surprising and difficult to explain.

The survey was carried out before the Budget last month, though this did not weigh on sentiment. KBC says its sense is that concerns in relation to water charges could have played a role.

The KBC Bank Ireland ESRI Consumer Sentiment index dropped from a near eight year high of 92.8 in September to 85.5 in October.

KBC says: "We can't find a fully conclusive reason for this deterioration."

Economist Austin Hughes said: "The results are also consistent with many consumers' experience of a recovery that they hear and read to be very healthy but one which they are not feeling in their personal finances."

He said that the drop in Irish consumer sentiment in October is the second biggest monthly fall in the past 22 months and bears many similarities to the slightly larger 7.8 point drop in the index seen in May.

He added that having two such falls in six months is "quite surprising" and that "sampling vagaries and volatile circumstances" may have played some role.