A drop in consumer confidence has been recorded in the latest IIB/ESRI monthly survey.
Figures from the IIB/ESRI monthly survey showed the Consumer Sentiment Index weakened to 84.8 in August, its lowest level in nearly a year.
Pessimism over the future of the Irish economy following recent interest rate increases and rising prices has been blamed as a major factor behind the fall.
The August drop was the third monthly decline in the past four and was the weakest since last September when Hurricane Katrina had a dramatic effect on confidence.
The August figure compares to a reading of 90.9 in July, 91.0 in August 2005 and 93.6 in August 2004.
The report showed although significant rises in living costs put pressure on people's spending power, consumers were optimistic about employment prospects and the longer term health of the economy.
The survey found 83 per cent fear rising energy prices will be their main concern next year, while 30 per cent worry they have not got adequate finances to cover further rate rises. Nine out of 10 consumers are also expecting higher house prices next year.
"The weakening in consumer sentiment is not surprising in the light of increases in borrowing costs and oil prices seen during early August," said Austin Hughes, of IIB Bank.
"Similar confidence measures fell in most other countries last month as the general economic outlook darkened.
"It is striking that Irish consumers were slightly more optimistic on job prospects last month in spite of a generally gloomy mood. Clearly consumers still believe in the underlying health of the Irish economy, but a sharp squeeze on household spending power is the dominant feature of the near term outlook," he said.