Consumer sentiment stabilised in December following the sharp improvement in November, according to the latest IIB Bank/ESRI consumer sentiment survey. It shows a reading of 78.3 in December, in line with November's 78.2 reading.

The survey shows that consumer's remain optimistic about the economic outlook, presumably encouraged by reports of international recovery.

Consumer sentiment has picked up significantly in recent months and the latest survey shows that the public remains optimistic about conditions over the next year.

However, there were signs of caution in relation to current spending, which meant that November's jump in the overall index was not repeated. The proportion of respondents indicating that now is not a good time to make major purchases jumped from 25.5 per cent in November to 32.9 per cent in December, while the share of positive respondents in this area remained largely unchanged at just under 25 per cent.

This tallies with anecdotal evidence of lacklustre pre-Christmas trading, commented Mr Austin Hughes, chief economist at IIB Bank.

Given that there was a modest improvement in consumers' perceptions of their own financial positions, Mr Hughes said consumers may have been hit by the absence of "a feel-good factor".

However, he said that a major factor is likely to have been the anticipation of heavy discounting in the post-Christmas sales, which led consumers to postpone major purchases.