Consumer sentiment rose sharply in January as shoppers availed of the post-Christmas sales and a more upbeat view of economic prospects to purchase big-ticket items.

The IIB/ESRI overall consumer sentiment index hit 85.7, up from 78.3, the sixth successive monthly rise. The index has now risen almost 25 points since last July and is at a level last seen in June 2002.

Mr Austin Hughes, an economist with IIB Bank, said the index showed that Irish consumers seemed fairly confident that the economy and their personal financial situations were "set on an improving trend".

"The big improvement in the buying climate owes much to price discounting in the Christmas sales, but people don't buy big-ticket items unless they are more confident about the future," he said.

It also reinforced recent suggestions that Irish consumers were becoming more price-sensitive, reflecting the experience in Britain and the US.

However, ESRI economist Mr David Duffy warned against reading too much into the headline figure.

"Historically, consumers' perceptions of the current environment improve in January, reflecting, at least in part, the winter sales, followed by a more subdued figure in February," he said.

Both he and Mr Hughes said there could be some weakening in the next month or two but that the underlying trend should remain positive.

The consumer sentiment survey asks five questions. These are broken into two sub-indices of current and future expectations.

The index of current conditions accelerated to 99.7 in January from 84.4 in December. Perceptions of the future outlook were less bullish with the forward-looking index rising to 76.3 from 74.3.

"Although the overall index shows a strong increase - 75 per cent of which is fuelled by current sentiment - the underlying figures suggest a more cautious optimism, with moderate improvements across the other index components," said Mr Duffy.

After a strong recent run, respondents were slightly more pessimistic about the outlook for jobs.