Consumer sentiment rose in January as consumers helped themselves to bargains in the January sales.
The IIB/ESRI consumer sentiment index rose to 106.2 in January compared to 98.2 in December.
"January's gain brings the IIB/ESRI Consumer Sentiment Index above its long-term average. 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 Irish economy," said IIB's chief economist, Austin Hughes.
"The key driver of the improvement was a sharp improvement in consumers' attitudes towards buying big-ticket items. In part, this reflects bargain hunting in post-Christmas sales. However, this result also accords with buoyant car sales, a strengthening property market and a surge in tax revenues.
This suggests the influence of the SSIAs may be beginning to be felt in earnest," Mr Hughes added.
According to David Duffy of the ESRI "Although the overall index shows a strong increase the underlying figures suggest a more cautious optimism, with more moderate improvements across the other index components."
Mr Hughes also noted that consumers appeared to take the recent rise in monthly mortgage payments in their stride.
"While we expect borrowing costs will increase further in 2006 and could squeeze some consumers spending power, these results suggest that 'measured' increases in interest rates are unlikely to do much damage to the Irish property market or to the broader economy," Mr Hughes said.