The annual rate of inflation eased to 1.6% in July from the rate of 1.7% in June, according to the latest figures from the Central Statistics Office.

Inflation has now fallen every month since March when it stood at 2.2%.

The CSO said that consumer prices fell by 0.1% in July, which compares to no change the same time last year.

Today's figures show that the prices of clothing and footwear fell by 5.1% last month due to the traditional summer sales.

Sales also brought down furnishings, household equipment and routine household maintenance costs.

Prices of alcoholic beverages and tobacco eased by 1% due to lower prices for wine and beer sold in supermarkets and off licences.

But transport costs rose by 1.3% due to an increase in air fares, which were partially offset by cheaper petrol and diesel prices.

Prices in restaurants and hotels also increased by 0.3% due to more expensive accommodation costs.

The EU measure of prices - which excludes mortgage repayments - fell by 0.1% in the month compared to a decrease of 0.2% the same month last year. Prices on average, as measured by the Harmonised Index of Consumer Prices, were 2% higher in July 2012 compared with July 2011