Consumer prices rose by almost half a percent in the year to May, according to the latest figures from the Central Statistics Office.
The figures show that prices on average, as measured by the Consumer Price Index, were down by 0.1% in the month but were 0.4% higher than May of last year.
The most notable increases in the year were educational costs, which were up 4.8%. Alcohol and tobacco prices were up 4.3%.
The main factors contributing to the monthly decrease were housing and utility costs, due mainly to lower mortgage interest repayments and a fall in the price of home heating oil.
The annual rate of inflation for Services was 1.8% in the year to May, while Goods were down by 1.3%.
Services, excluding mortgage interest repayments, increased by 2.8% in the year since May 2012.
The CPI excluding mortgage interest decreased by 0.1% in the month and rose by 0.9% in the year.
Alan McQuaid, chief economist with Merrion Stockbrokers, pointed out that the May figure was the lowest annual inflation rate since August 2010.
"Continued weak consumer demand will in general put downward pressure on prices in the months ahead," he said.
"The austerity measures announced in the budget, in particular the residential property tax, will again hit disposable incomes, which in turn will weigh negatively on spending power."
"It is still hard to see the average inflation rate for the year as a whole coming in much higher than 1% as against 1.7% and 2.6% in 2012 and 2011 respectively," Alan McQuaid concluded.
Philip O'Sullivan, chief economist with Investec, agreed that inflation was likely to remain muted over the coming months and the trends in headline prices were continuing to provide respite for consumers.
However, he cautioned that October's budget could see upward pressure on inflation should further indirect tax increases be unveiled by the government.
ISME says figures mask reality for business
Business group ISME said the low inflation figures mask the reality for businesses where the effect of legacy costs is damaging competitiveness.
"The difference between a new rental and existing lease costs can be as high as 50%, and new employees can be employed at up to 25% below current rates of pay," Mark Fielding, CEO of ISME said.
"Tough decisions must be made on general government spending, local authority funding, rent reviews and labour market reform, which will reduce business costs, stimulate growth and job creation. There is much more work to be done on cost control and reform and today's figures should not allow for government complacency," he concluded.