Confidence among consumers and businesses declined for a second consecutive month in April, according to the latest Economic Pulse from Bank of Ireland.
The hit to consumer sentiment, as recorded by the index, saw it falling close to its Covid-19 low point.
The inflationary environment contributed to rising uncertainty among households, who lowered their assessment of the economic situation as well as being more downbeat about their own finances.
More than half of consumers surveyed said they were holding back on spending.
The Business Pulse - having lost ground again in April - remains above its pre-pandemic level.
The research pointed to some slippage in growth ambitions, with 55% of firms indicating that they plan to expand their operations in the next one to three years.
That was down from almost three in five in January.
Notably, there was no pick up in the proportion of companies looking to scale down their operations.
The results of the latest survey were not unexpected in light of recent geopolitical developments.
"The fallout from the war in Ukraine - increased uncertainty, higher global energy and non-energy commodity prices, and the spill-over effects of the sanctions on Russia to growth in our trading partners – will dampen economic activity in Ireland this year," Dr Loretta O'Sullivan, Bank of Ireland Group Chief Economist said.
"The lifting of public health restrictions means that GDP is still set to expand, but by less than previously expected not least because this latest shock has shaken consumer and business confidence."
On the housing front, consumers raised their expectations for house price gains with 28% saying they intended to undertake renovations in the year ahead, despite rising costs.
However, it was down slightly on previous readings which the report attributes to possible "value for money concerns as well as capacity constraints in the construction sector".