Consumers are feeling more bleak about their household finances in new figures published today. The KBC/ESRI Consumer Sentiment Index dropped by nearly 8 points in May.

The overall index decreased to 79.4 in May, from 87.2 in April. But this was up from 61.2 in May last year.

It says the 3-month moving average fell slightly to 83.2 in May from 85.3 in April.

It appears to show a marked decline in confidence in the economy.

The index of current economic conditions fell to 90.6, from 97.0 last month. KBC says it shows households are more negative about the current buying climate and their financial situation - compared with 12 months ago.

It comes on the same day that figures show lending to Irish households has fallen by 3.6% across the year.

While consumer expectations also fell to 71.8 from 80.6 in April.

This was mainly driven by a more negative perception of future household finances amongst consumers.

Austin Hughes is Chief Economist with KBC Bank.