Consumer sentiment rose sharply in January as shoppers exploited the new year sales to purchase expensive items.
The latest IIB/ESRI index of consumer sentiment climbed to 106.2 in January from 98.2 in December and the first time in a year that the index had risen above the long-term average of 100.
All five elements of the survey were stronger than in December as the index notched up its fourth successive monthly gain for the first time since May 2002.
IIB chief economist Austin Hughes said confidence was continuing to rebound from difficulties encountered in 2005.
"After the difficulties posed by hurricanes, higher energy costs and Eddie Hobbs's focus on rip-offs in 2005, it appears consumers are now more confident in the underlying strength of the economy.," he said.
Mr Hughes welcomed the limited impact of a pre-Christmas rise in mortgage borrowing costs on consumer intentions.
"The key driver of the improvement was a sharp improvement in consumers' attitudes towards buying big ticket items. In part, this reflects hunting in post-Christmas sales. However, this result also accords with buoyant car sales, a strengthening property market and a surge in tax revenues," he said.
The index of current economic conditions recorded the most significant monthly rise, jumping to 116.7 from 102.2 in December. Other components of the index recorded more moderate gains.
The latest Exchequer returns data for January confirm the picture of continued strong consumption growth. VAT revenues rose by 22 per cent year on year, while customs duties rose 24 per cent, driven mainly by strong growth in car sales.
ESRI economist David Duffy said consumer expectations would moderate in February.
"Historically, this component has improved every January, reflecting, at least in part, the winter sales, followed by a more subdued figure in February. We expect this pattern to continue and some moderation might be anticipated next month."
The data is obtained from 900 telephone interviews, conducted in the first two weeks of the month.
