Irish consumer sentiment improved in August, reaching its highest level in almost five years as pessimistic views about the economic outlook abated.

The overall KBC Ireland/ESRI consumer sentiment index rose to 70 in August, up from 67.7 in July. That brings it to seven months out of eight that the increased this year. The consumer index reached its highest point in October 2007, when it measured 71.8.

The overall index has two parts - an index of consumer expectation, which looks at consumers’ outlook for the ext year, and an index that focuses on the current situation.

The notable feature of the 2012 survey is a clear easing in the number of consumers who feel things are set to get even worse, according to KBC chief economist Austin Hughes.

In August 2011, some 59 per cent of consumers felt the Irish economy would weaken further in the following twelve months. That proportion has now fallen to 34 per cent.

“We continue to believe that the improvement in sentiment is primarily driven by an easing in fears rather than by a radically more positive view of either the outlook for the Irish economy or consumers’ own finances,” he said.