Consumer prices were up 0.4% in March, compared to an increase of 1% in March of last year, according to the CSO.

Average prices in March were 0.5% higher than in March of last year, the figures show.

Alcohol and tobacco accounted for the biggest changes in the year. Prices in that category were up nearly 5%.

Education recorded an increase of 4.7%, as measured by the Consumer Price Index.

The biggest monthly changes were in clothing and footwear, where a 3.8% increase in prices was recorded.

Transport costs were up 1.2%, mainly accounted for by an increase in airfares and fuel prices.

Alan McQuaid, chief economist with Merrion Stockbrokers says the latest figures show that inflationary pressures remain fairly subdued.

"Domestic inflationary pressures in Ireland are likely to remain depressed for some time to come. Continued weak consumer demand will put downward pressure on prices in the months ahead," according to Alan McQuaid.

"We think Ireland's headline annual inflation rate will fall back further in 2013, with an average figure of 1.3% forecast, down from 1.7% in 2012 and 2.6% in 2011," he concluded.

Philip O'Sullivan of NCB notes that the annual inflation rate is at a two and a half year low.

"We have previously noted that muted inflationary pressures are providing some respite to Irish consumers, and broadly speaking this remains the case," he concluded.

Goodbody Economist Juliet Tennent points out that inflation in Ireland is now significantly below the euro-area average which fell to 1.7% from 1.8% in February.

Mark Fielding, CEO of business lobby group ISME, says the reduced inflation figures are simply a cyclical response to the recession, rather than policy induced changes.

He called on the government to actively engage in reducing underlying costs in the economy, rather than depending on normal reductions due to reduced demand.