Irish consumer confidence fell markedly this month as mounting job losses fuelled anxiety over the economy.

The IIB/Economic and Social Research Institute (ESRI) consumer sentiment index tumbled to 60.9 in July from 65.8, the sharpest monthly decline since August 2002.

The decrease mirrors a surprise dip in consumer sentiment in the US.

A spate of lay-offs is blamed for the slump; 87 per cent of respondents believed unemployment would continue to rise with only 5 per cent expecting a decline.

But while gloom over the economy grew, most households said their personal financial situation remained "broadly stable".

IIB chief economist Mr Austin Hughes cautioned against reading too much into the data. The July results could be a blip and might be followed by an upturn in August, he said.

The three-monthly average, widely regarded as a more accurate barometer, is ahead of figures for February and March and remains broadly in line with readings since the turn of the year.

"The disjoint between heightened pessimism in regard to the outlook for the economy as a whole and broad stability in the financial situation of Irish households is of some significance to Irish economic prospects, a significance that could be overlooked in some forecasts," Mr Hughes said.

A major fall in retail spending should not be assumed as the public appeared to have been downbeat about the economy for more than a year and may have already factored these misgivings into shopping habits, he added.