The Irish economy remains in the grip of deflationary pressures thanks largely to cheaper fuel, clothing and footwear.
The latest Consumer Price Index suggests the average basket of goods and services was 0.2 per cent lower in July than a year ago.
This marked the eighth consecutive month of negative annual inflation or deflation.
The primary drivers were decreases in transport (-3.8 per cent), clothing and footwear (-3.7 per cent), and food and non-alcoholic beverages (-2.4 per cent).
Conversely, there were increases in the cost of education (5per cent), communications (2.8 per cent) and restaurants and hotels (1.9 per cent).
On a monthly basis, consumer prices fell by 0.3 per cent in July on back of 7.7 per cent decline in the average cost of clothing and footwear. It comes on the back of a 0.3 per cent increase in the CPI in June and a 0.4 per cent increase in May.
The Irish Small and Medium Enterprises Association (Isme) said the figures indicated recovery was still weak.
It called for a review of all business costs and a commitment to benchmark state influenced costs against our international competitors.
“Compared to our key competitors, Ireland remains an expensive business location. The upward cost pressure has already commenced, with the Government backing wage increases, adding to property and business services cost increases,” Isme chief executive, Mark Fielding said.
“The danger is that any externally generated temporary gains being experienced through currency, interest and oil variations could be quickly eroded, as global growth intensifies,” he added.
Mr Fielding said: “ Even with such a fragile recovery there is the incessant chatter from the usual quarters for wage increases. The latest wheeze is the Living Wage, an economically unviable concept that would force employers to cut jobs.”
Inflation for the euro zone as a whole, meanwhile, was predicted to rise to 0.2 per cent this quarter and 0.7 per cent next by a poll of economists contacted by Reuters.
They also forecast it would not reach the European Central Bank’s 2 per cent target ceiling until at least 2017.
The predictions come after six months of ECB stimulus, making them disappointing reading for policymakers struggling to bolster growth and produce any meaningful rise in prices.
“The market seems to have become less convinced about the strength of the recovery and the ability of the ECB to bring inflation back to target,” said Elwin de Groot at Rabobank.
Additional reporting by Reuters
