Consumer prices falling by an average of 0.3%

Inflationary pressure in the Irish economy remains extremely weak with the latest official figures showing consumer prices fell by 0.3 per cent in past 12 months.

The primary drivers were decreases in transport (-5.9 per cent), furnishings and household equipment (-2.5 per cent), and clothing and footwear (-2.4 per cent).

Despite the booming economy, Ireland’s headline inflation rate has been negative for 12 of the last 15 months.

This is principally because of the collapse in oil prices which results in lower energy and transport costs.

A similar trend can be identified across the euro area, which recorded an annual inflation or deflation rate of -0.1 per cent in March, despite a sequence of measures.

Amid the overall decline in Irish prices, the cost of services like insurance, particularly motor insurance, and education are continuing to rise.

The figures reveal miscellaneous goods and services, which includes insurance, rose by 4.3 per cent in the past 12 months while education prices increased by 3.8 per cent.

There was also a 1.7 per cent rise in the average prices charges by restaurants and hotels.

Consumer prices in March, as measured by the Consumer Price Index (CPI), also rose by 0.4 per cent on a monthly basis with increases in clothing and footwear (+3.3 per cent ) and restaurants and hotels (+0.7 per cent ) highlighted as the main changes.

The Irish Small and Medium Enterprises Association (Isme) said the weak headline rate masked a loss of competitiveness. Chief executive Mark Fielding said insurance alone has seen an 11 per cent increase in the last year, with motor and business insurance increasing by in excess of 30 per cent.

“Cost increases such as insurance, labour and energy are slowing SME growth and must be addressed,” he said.

Alan McQuaid of Merrion Stockbrokers said oil prices would be critical in determining the headline inflation outlook over the next 12 months.

“ There are tentative signs that prices may have stabilised in and around $40 a barrel for Brent crude. If a formal agreement is reached by producers later this month to freeze output, oil prices could possibly hit $50 as the year goes on, pushing the CPI higher as a result,” he said.

"With prices falling into negative territory, some fear that deflation could become entrenched, though we don't see this as an issue here in Ireland, " he added.