The annual rate of inflation has eased slightly, down to 4.3% last month from 4.4% in July.
Latest figures from the Central Statistics Office show a drop in petrol prices was the main factor in the fall.
It is good news for the national pay talks where the social partners are trying to settle on new pay deal before the end of this week.
The trade unions however are likely to notice that the easing in inflation is only marginal and the rate of price increases during August was exactly the same as in the same month last year.
The figures show that electricity prices went up by 17.6% last month but that this was compensated for by a reductions of 4.4% and 4.8% in the price of petrol and diesel respectively.
There was also a reduction of 2.9% in average rental costs for housing during August.
The figures also show that overall goods prices in Ireland have risen by 3.5% over the past year while the cost of services has gone up by an average of 5.3%.
The drop was welcomed by the Small Firms Association.
Patricia Callan said it was a 'welcome relief for small businesses who are finding consistently high cost pressures are threatening their viability'.
She called on the Government to do more to ensure the downward trajectory is maintained and said that 'reducing the inflation rate should be the corner-stone in framing this year's budget'.
Meanwhile official figures show that employment in construction in July was 16% lower than in the same month last year. It was the sharpest fall in construction jobs since they began decreasing in April last year.
Inflation fall will not affect 5% pay claim
Today’s marginal fall in inflation will not affect the 5% annual pay claims lodged by private sector unions, according to the head of ICTU's private sector committee.
Arriving for today’s session of national pay talks Jerry Shanahan said that ‘one swallow did not make a summer’ and that as yet no clear downward trend on inflation was discernible.
He said the fall from 4.4% to 4.3% merely represented a snapshot.
He said the inflation figure that unions are projecting towards the end of the year is close to 5% and they are sticking with that number.
SIPTU General President Jack O'Connor said it was better that the figures were marginally down than marginally up, but said it was crucial to establish what trend could be gleaned from the figures.
He said that should the trend be positive, from the point of view of controlling inflation, it would be helpful from the point of view of making an agreement.
Congress General Secretary David Begg described the inflation situation as steady.