Figures released this morning show that the annual inflation rate fell in March, for the seventh month in a row, to 1.3%.
Consumer prices in March increased by 0.4%, according to the latest figures from the Central Statistics Office.
This compares with an increase of 0.8% in March of last year.
As a result, the annual rate of inflation fell to 1.3% from 1.7% in February.
Clothing and footwear prices rose in March due to a further recovery in prices after the end of the winter sales.
Housing, water, electricity, gas and other fuels also rose with increases in mortgage interest repayments, electricity costs and local authority rents.
However, home heating oil prices fell last month.
March also saw increases in health and house insurance costs, which were partially offset by falling motor insurance costs.
The CSO said that the EU Harmonised Index of Consumer Prices increased by 0.4% in the month.
This compares to an increase of 0.7% in March of last year and as a result the annual rate of inflation as measured by the HICP fell to 1.8%, down from 2.2% in February.
IBEC's Director General, Turlough O'Sullivan, said it was excellent news and that low inflation will have to be reflected in the current national pay talks.
The General Secretary of the Irish Congress of Trade Unions David Begg said the drop in inflation was larger than expected but warned that it will rise again later in the year.
