The headline rate of inflation dropped to 5.9% last month from a high of 7% in November, according to figures from the Central Statistics Office.
The sizeable drop in the figure had been expected. It results from a decision in last month's budget to cut the excise duty by 6p for a litre of diesel and 2p for a litre of unleaded petrol.
The decision by Finance Minister Charlie McCreevy to refrain from imposing any increases in duties on cigarettes in the Budget also played a part.
Twelve months ago a 50p hike in the duty on cigarettes instantly added almost 0.8% to the rate of inflation. The fact that 12 months has now passed since that price increase means the 0.8% stimulus falls out of the index.
