Consumer confidence plunges due to fears of 100,000 job losses from crash-out Brexit
Brexit has blown the confidence of consumers as households worry about Brexit and the impact it is likely to have on jobs.
The index that measures consumer sentiment has fallen to its lowest level in five years.
Consumers are gloomy and nervous about the outlook for the economy as some estimates predict that up to 100,000 jobs could be lost from a no-deal exit of the UK from the European Union.
Sentiment among consumers has fallen to a 70-month low as people have now started to get a sense of the impact a hard Brexit will have on this country, according to KBC Bank/ESRI, which jointly produced the index.
The KBC Bank consumer sentiment index dropped to 77.2 in August from 85.5 in July, an indication that consumers are preparing for the worst-case scenario.
The August reading is the lowest since November 2013, while the monthly fall is the second largest since December 2012.
The sharp decline in the index was also attributed to the tougher line taken by the UK Prime Minister Boris Johnson, suggesting a strong likelihood that the UK would crash out of the EU.
KBC Bank chief economist Austin Hughes said: "It seems we are seeing a stepped and staggered deterioration in Irish consumer confidence as a full realisation of the scale of problems posed by Brexit comes into sharper focus."
The largest drop in the sentiment index was seen in the jobs component of the survey.
Roughly one in two consumers now expects unemployment to rise in the next year, while just one in five sees a continuation of the improving trend of the last six years.
The Central Bank recently warned that in a hard Brexit employment could be 34,000 lower over the next three years. Employment levels could be 110,000 lower than otherwise would be the case over the next decade, the Central Bank warned.
There were also some warnings of large-scale job losses at power plants during the survey period that would also have weighed on sentiment.
Sentiment in relation to the general outlook for the Irish economy also took a tumble in August, with just over half of those surveyed now expecting the Irish economy to weaken in the year ahead.
There was also a decline in the outlook for household finance over the next year.
One in four consumers now sees their financial situation worsening in the next year, with only one in eight anticipating an improvement.
The details of the August survey suggest Irish consumers are now quite gloomy with "Brexit fears significantly outweighing still generally positive current conditions", Mr Hughes said.
Consumers have said they are less likely to buy goods in the coming year.
These elements suggest a cautious approach to household spending, rather than cutbacks, is likely to continue until Brexit is resolved, Mr Hughes added.
In the euro area, weakening economic growth and political tensions in a number of countries have also prompted a consumer confidence decline.