Official figures show that consumer prices continued to move higher in December, with higher fuel prices one of the main factors.
The Central Statistics Office said prices rose 0.2% from November, giving an annual rate of inflation of 1.3%. This was the highest annual rate since November 2008.
The CSO also said that prices fell at an average rate of 1% over the whole of 2010, compared with an average drop of 4.5% in 2009.
A breakdown of the December figures showed that transport prices rose by 1.8% in the month, due to increases in petrol and diesel prices, while prices for miscellaneous good and services gained 1.2%. This category includes private health insurance and motor insurance.
Home heating oil prices alsojumped by 11% in the month, but clothing and footwear prices fell 2.2% due to sales. Prices of alcohol and tobacco dropped 1.3%, mainly because of lower prices for wine and spirits in off-licences and supermarkets.
Mortgage interest and rents both fell by 0.1% in December. Mortgage costs are up 24.4% over 12 months, however.
The EU measurement of prices - which excludes mortgage repayment costs - showed a monthly fall of 0.2%, giving an annual drop of 0.5%.
Price falls not over, say economists
Bloxham economist Alan McQuaid said the main upward pressure on prices in the months ahead would come from mortgage interest rates and food and energy costs. 'But there's no doubt that the upward trend in global commodity prices if maintained, has the potential to push Ireland's headline inflation rate higher in 2011 than what analysts are currently projecting,' he added. He is expecting an annual inflation rate of 1.5% to 2% this year.
Davy's Conall MacCoille said, however, that price pressures appear more muted when the impact of mortgage costs is excluded.
Goodbody's Dermot O'Leary also said it was premature to say that price falls in the Irish economy are over. He said rises in energy and food prices were outside Ireland's control, but outside of these, global inflation pressures were low.
Ulster Bank said the annual rate of change in core services prices - which the bank says should serve as an indicator of underlying price pressures in the domestic economy - was little changed at -0.3%, and was not showing any upward drift.
