Inflation dropped to its lowest level since November 2006 last month as retailers cut prices for clothes and shoes in New Year sales.
Figures released by the Central Statistics Office (CSO) show the annual rate fell by 0.4 per cent from 4.7 per cent in December to 4.3 per cent in January.
The CSO is citing a 13 per cent drop in post-Christmas sales prices as the cause, while overall consumer prices fell by 0.7 per cent.
The statistics for January also showed a rise in health costs by 2.9 per cent, while alcoholic beverages and tobacco prices increased by 0.8 per cent, and food costs rose by 0.4 per cent.
Fine Gael welcomed the overall fall in inflation today, but finance spokesman Richard Bruton said Ireland's high rate of inflation relative to the rest of the euro zone was due to the Minister for Finance's "inept" economic management.
"The fall in inflation will provide some relief for hard-pressed householders, who have seen household bills rise by almost two thirds under Brian Cowen's inept handling of the economy," Mr Bruton said.
"The lower inflation rate is due mainly to the bigger than usual retailer discounts on clothing and home furnishings in the January sales . . . falling wage pressures in the services sector are due to rising unemployment, and have nothing to do with Government policies," he added.
Independent Business Organisation, ISME also welcomed the drop in inflation as a "step in the right direction" but said more needed to be done on the domestic front in order to bring the figure down to the Government's stated aim of 2 per cent.
ISME chief executive Mark Fielding said: "While the trend in inflation is heading in the right direction, it is imperative that domestic costs are kept under control to prevent further inflationary pressures over the next number of months."