Irish consumer sentiment deteriorated sharply in September as concerns about oil prices, job losses and "rip-off Ireland" took their toll.

This is according to the latest monthly joint survey by IIB Bank and the Economic and Social Research Institute (ESRI).

But the September index was affected by a unique combination of negative news and may show a partial recovery in the coming months as oil prices soften, according to IIB's chief economist Austin Hughes.

The Irish consumer sentiment index fell sharply in September to 80.5, compared with 91.5 in August, the largest monthly fall since July 2002. "Alongside the sharp increase in energy costs, a spate of high-profile job loss announcements and the continuing fallout from 'Rip-off Republic' continued to weigh on sentiment," said Mr Hughes.

According to the survey results the deterioration is greater than that seen in most other countries apart from the US, where Hurricane Katrina has weighed heavily on sentiment.

Mr Hughes said that large- scale job losses in Donegal's Hospira plant had drawn the attention of consumers to volatility in the labour market in spite of a positive overall employment situation.

"For the average consumer, high-profile coverage of job losses creates a sense of insecurity about their own job. On the other hand, official data showing a strong job picture doesn't have the same 'will it happen to me?' effect," said Mr Hughes.

The sharp September fall follows more modest falls in July and August, suggesting a downbeat mood amongst consumers during the third quarter. According to data released last week by the Central Statistics Office, economic growth in the preceding quarter was strongly dependant on consumer spending.

Mr Hughes suggested that the latest consumer sentiment data could act to restrain growth. "We think a cautious attitude on the part of consumers will act as a restraining influence on spending growth," said Mr Hughes.