Irish consumer sentiment has jumped to its highest level in six and a half years as confidence around economic recovery builds.

The latest KBC Bank Ireland/ESRI Consumer Sentiment Index rose to 84.6 in January from 79.8 the previous month, taking the index to its highest level since May 2007.

A stronger buying climate was responsible for much of the monthly gain as consumers took advantage of Christmas sales, the report said.

It estimated this element accounted for about 70 per cent of the rise in the index between December and January.

A series of upbeat economic forecasts and commentaries since the country’s exit of the bailout programme also appears to have boosted confidence.

However, the KBC cautioned that it would be incorrect to suggest that conditions for Irish consumers were now back to “normal”.

“Instead, 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.”

The uptick in Irish consumer sentiment last month mirrored gains in similar indicators for the US, the Euro 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,” the report said.