The rate of inflation fell to 4.7% last month, according to figures released by the Central Statistics Office.
The rate is down from 5% in November.
Clothing and footwear fell in price last month but overall consumer prices rose by 0.1%.
The price of alcohol and tobacco increased, primarily due to the increase in excise duty announced in December's Budget.
There were also increases in the price of housing, water, electricity, gas and other fuels.
The average rate of inflation last year was 4.9%, the highest annual rate since 2001.
In 2007, mortgage interest repayments increased by more than 40%, energy products went up 4.6%.
Goods inflation of 1% was well behind service inflation, which was 8.4% for the year.
The figures released today are from December's Consumer Price Index, which is used to measure the average price consumers pay for goods and services.
