The annual inflation rate fell to 4.8% last month, having increased to 5% in July, according to the Central Statistics Office, with household bills and education costs higher.
On a monthly basis consumer prices were up 0.5% in August.
An EU annual measure of inflation - (Harmonised Index of Consumer Prices)- which excludes mortgage payments- showed a decrease from 2.7% to 2.3% in the month.
Today's figures show that the annual pace of price growth fell to its lowest point since February.
On an annual basis there were higher housing, water, and fuel bills (up 21.8%) and an increase in the price of alcoholic beverages & tobacco (5.6%).
Fuel bills will be lower in the next few months after the the energy regulator approved a move to reduce household electricity bills by 5.4% and rubber stamped a 10% fall in gas bills, on top of a 10% reduction already approved.
Higher education ( up 4.6%) and restaurant and hotel ( up 3.8%) costs and also contributed to the annual rise.
On an annual basis there was a fall in the cost of clothing and footwear (down 3.4%) and household furnishings and related costs (1.8%).
A breakdown of the CSO figures showed that annual inflation in the service sector of the economy was down slightly at 8.5% in August, while the rate for goods was just 0.2% on the year, down from 0.6% last year.
On a monthly basis clothing and footwear increased 5%, recovering after the summer sales, and housing, water, and fuel bills rose 0.9%. These increases were partially offset by a fall in transport costs.
Davy Stockbrokers said because there was no ECB mortgage interst rate increase lst month CPI inflation will fall next month, possibly to 4.6%. But it will pick up again into year-end.
Pat McArdle of Ulster bank said he expects the September rate to fall to 4.6% but the subsequent rebound will be less than earlier expected because of the absence of an ECB interest rate hike in September, which, would have fed through in October.
'As a result, the average for the year is likely to be 4.9% instead of the previously forecast 5%', he said.
He said the August HICP was 2.3% which was well below the consensus expectation of 2.6%.
'As the HICP excludes mortgage rates, the absence of an ECB hike has no impact and we expect it to rebound in Sep and to stay elevated over the remainder of the year, averaging 2.75% for the year as a whole', he said.
IBEC, the group that represents Irish business, welcomed the fall in inflation.
IBEC Senior Economist Fergal O'Brien said it was encouraging to see that the harmonised index of inflation has fallen to 2.3% and is now closer to the euro area average than at any stage over the past year.
