More than one third of households are under financial pressure

The pressure of household budgets means spending plans have weakened.

And around half of consumers expecting expenditure pressures on them to worse, according to the latest Credit Union Consumer Sentiment Index.

The index slipped to 53.2 in March, its weakest reading of the year to date.

But economist Austin Hughes and Core Research, who compiled the index said this is slightly lower than the 55.6 reading for February.

It was also the first month-on-month drop since last November.

Mr Hughes said: “The general sense of a more nervous Irish consumer is underlined by markedly more negative than positive responses to all the key elements of the survey.

“As such, it suggests a clear ‘feel-bad’ factor on the part of Irish consumers.”

He said the softer March sentiment reading suggests Irish consumers remain concerned and cash-strapped.

A special question asked as part of the survey found that 35pc of consumers say they are struggling financially.

Around half of these people say that higher inflation has had a “substantial impact” on their household finances.

The remainder reported a smaller impact.

Mr Hughes said some people are in a precarious financial position and even a modest change in their circumstances may markedly alter the sustainability of their position.

Some 56pc of Irish consumers say that inflation has caused a worsening in their financial circumstances but they are managing to cope.

Just 7pc of consumers not feeling the effects of higher inflation.

That 7pc works out at between 250,000 and 300,000 adults who say they are largely immune to inflation at present, Mr Hughes calculated

Those reporting no impact from higher inflation were concentrated among those on higher incomes.

Over 65s were also more likely to report no impact than other age groups. But others who have reached retirement age are under financial pressure.

“We might speculate that, at one extreme, some of these older consumers are always struggling to cope with fixed and limited spending power while, at the other end of the spectrum, some older consumers may be finding their finances are more than adequate to deal with reduced spending commitments,” Mr Hughes said.

Slightly less than half of consumers expect cost-of-living pressures on their households to worsen in the next year, with just 15pc saying the financial pressures should ease.

Negative financial news dominated the survey period, the index compilers said.

The pull-back in Irish consumer sentiment in March is only the second in the past six months.

This signals that consumers are still very much aware of the substantial financial headwinds that they face this year, Mr Hughes said, rather than pointing to a marked darkening in the mood in Irish households.

“However, recent global financial turbulence, allied to persistent inflationary pressures, suggests sentiment could remain subdued and might even appear more strained in the months ahead,” he said.

The economist said it was encouraging that consumers were less negative about the outlook for their household finances in the year ahead.

This likely reflects a continuing easing in global energy costs and some impact from the Government’s latest cost-of-living package announced during the survey period.

“That said, the still overwhelmingly negative tone of this part of the survey emphasises that Irish consumers remain strongly of the view that their household finances will weaken further in the next 12 months,” he said.