Consumer sentiment has risen to its highest level in nine years on the prospect of tax cuts in the Budget as well as expected public sector pay increases.
The latest KCB Bank/ESRI consumer sentiment index rose to 102.8 in June from 98.5 in May. This brings the index to its highest level since February 2006.
But KBC Bank economist Austin Hughes said the strong reading does not represent a sea-change in consumer thinking and does not suggest that Irish consumers are especially upbeat about their personal financial circumstances.
He pointed out that in May, 17% of respondents said their household finances had improved in the last 12 months, while 33% reported a deterioration.
Those figures changed to 20% and 31% in June.
"So while the June reading represents an improvement, it remains the case that notably more consumers reported tougher financial circumstances in the past year than experienced rising spending power," the economist said.
He cautioned that today's survey should not be interpreted as signalling "unbound optimism."
"The survey suggests a broadly shared sense among consumers that the Irish economy is doing well and the outlook for jobs has improved but pressure on personal finances is still widespread," Mr Hughes added.
