The annual rate of inflation went up to 4.7% last month from 4.3% in April as a result of higher fuel prices as well as increases in average mortgage repayments.

The Consumer Price Index show the cost of living rose by 4.7% in the 12 months to May, up from 4.3% in April, and almost unchanged from the 5% recorded a year earlier.

The cost of diesel for transportation rose almost twice as fast as petrol last month and now costs 23% more than this time last year.

There was also a very large increase in the cost of home heating oil which has now risen by more than 47% over the past year.

Mortgage costs went up by 2% during May alone as banks and other lenders pushed through higher interest rates as credit conditions tighten.

In addition the cost of food continues to rise, particularly for bread, flour, and dairy products, as well as for beef and lamb. Taken together the average cost of food according to the index has now risen by 8% over the past year.

There was evidence too that consumers are reacting to the higher prices by spending less.

Retail sales figures for April show the volume of retail sales down by 3.2% compared with a year earlier.

This is the sharpest fall in retail sales for five years and continues a trend that has been in place since last October.

The decline in retail sales is consistent with the sharp deterioration in VAT receipts reported by the Department of Finance last week.