CONSUMERS have started the year in an upbeat mood.
The consumer sentiment index for January hit its highest level since May 2007, in response to Christmas sales and an improving jobs outlook.
Economists said fears over household finances were easing.
The KBC Bank/ESRI Consumer Sentiment Index rose to 84.6 in January from 79.8 in December, taking the index to its highest level in six-and-a-half years.
KBC Bank economist Austin Hughes said it was not the case that consumers feel their economic conditions were back to normal.
"We would argue that the trend in sentiment data through the past year is consistent with a sense that Irish consumers are gradually recovering from the extreme difficulties of recent years. Painful legacies of the crisis mean that this is likely to be a lengthy and 'choppy' process rather than a smooth pick-up in sentiment."
But he said that consumers were gradually recovering from the painful economic hits of the past five years.
A number of upbeat economic forecasts and commentaries since the State exited the bailout programme in December have helped boost confidence.
The rise in consumer sentiment last month is similar to gains in similar indicators for the US, the eurozone area and the UK.
"A sense that most western economies are clearly past the worst may be an important factor in the shared improvement in the mood of consumers last month," Mr Hughes said.
And expectations for family finances over the next 12 months have improved marginally, the survey found.
But consumers continue to worry about the future.
Mr Hughes explained: "Consumers are sensing some positive developments that may eventually impact on their personal finances, but the persistence of clear negative balances argue that worries about spending power continue to dominate thinking on this issue."
Meanwhile, more than a third of people say that they are now saving money every month.
There are now 37pc of people who say they save regularly.
Just 6pc of respondents feel government policy encourages saving. This is the second lowest share recorded since the index began.
Nearly two-thirds of people said government policy discourages saving. Savings tax jumped from 33pc to 41pc last month on any interest earned.