Irish consumer sentiment dropped in November from a six-year high the previous month, as austerity measures introduced in the budget impacted on consumers’ willingness to spend.

The KBC Bank Ireland/ESRI consumer sentiment index fell to 71.0 from 76.2 in October, when it was at the highest level since June 2007.

KBC Bank Ireland chief economist Austin Hughes said the weakening in consumer sentiment last month “was entirely the result of a reassessment of the financial situation of households”.

“The survey results may be disappointing but they shouldn’t be seen as entirely surprising. The Irish economic recovery now emerging is still tentative and many consumers remain severely cash constrained… consumers lack any clear source of a ‘feelgood’ factor at present.”

Despite the fall, the reading for the month remains the third-highest since Ireland entered the EU/IMF bailout programme in November 2010, well above the record low of 39.6 reached in July 2008.

The three-month moving average also continued to improve to 73.4, the seventh consecutive monthly increase.

The section of the index recording sentiment relating to unemployment was positive for the first time since December 2004. This was despite the fact that the survey was taken before the publication of figures from the Central Statistics Office last week, which showed unemployment had fallen to 12.8 per cent, the lowest level since 2009.

The November results also show a marginal improvement in consumers’ views on the general outlook for the Irish economy.

“This result could also reflect a growing sense of optimism that the economy will move onto a more positive trajectory in the wake of Ireland’s looming exit from the bailout,” Mr Hughes said.