The latest figures from the Central Statistics Office show that consumer prices fell at an annual rate of 6.5% last month.
Prices fell by 0.4% in September, having risen for the first time in 11 months in August.
The main factor in September's fall was a 1.3% drop in the price of food and non-alcoholic drinks, while lower air fares also pushed transport prices down 0.9%.
But there was a 3.6% increase in clothing and footwear prices as summer sales ended.
Prices of goods fell at an annual rate of 5.3% in September, while services dropped 7.5%.
The EU harmonised measure of inflation - which excludes mortgage repayments - showed a 3% annual fall after a 0.4% monthly drop in prices.
ISME, the group representing small and medium enterprises, said the Government should face down demands by trade unions for pay increases in light of the inflation figures.
While Retail Ireland, the IBEC group that represents the Irish retail sector, has said that aggressive price cutting by retailers is evident in new inflation figures.
Retail Ireland Director Torlach Denihan said: 'Today's figures are proof of both increased value for money for consumers and the extreme level of competition in the retail sector.'
Mr Denihan said that over the last year consumers have benefited from price falls as follows; food -6%, clothing -14%, footwear -13.3%, furniture -6.5%, carpets -8%, consumer electronics -15.1%, home computers -25.2% and toys -12.1%.
'Despite these price falls, retail sales are poor and 29,000 former retailer workers joined the Live Register in the last year.
'The Government must take decisive action to support employment in the retail sector and address the serious problems of cross-border shopping, flat consumer demand and an uncompetitive cost base.'
