DUBLIN (Reuters) - A modest improvement in Irish consumer sentiment last month thanks to a brighter outlook for household finances was enough to return the index to its highest level since early last year, a survey showed on Friday.
Ireland's economy has posted the fastest growth in Europe for the past three years and unemployment has fallen rapidly, but that has failed to buoy many consumers, some of whom are experiencing an uneven recovery and rising living costs.
The KBC Bank Ireland/ESRI Consumer Sentiment Index rose to 105.8 in September from 102.9 in August, its highest level since February last year but shy of a 15-year high of 108.6 in January 2016 before Britain's vote to leave the European Union.
While the broad picture was still one of limited gains in incomes, the survey suggested consumers are now more attuned to the possibility of positive surprises, KBC chief economist Austin Hughes said.
"The September survey suggests that Irish consumers now see the economic glass as half full. It does not imply they see themselves at a party where the punchbowl is overflowing," Hughes said.
"From the perspective of the average consumer, the sentiment survey suggests that the Irish economy is clearly improving but it still feels undercooked rather than overheating."
He added that the improving if choppy sentiment data this year indicated a gradual unwinding of the nervousness that followed Britain's decision to leave the EU as a feared sharp and speedy deterioration in the economy failed to materialise.
With close trading links to Britain and a shared land border, Ireland is widely considered the EU member most at risk when its neighbour leaves the bloc.