Manufacturing goods price inflation continued to decelerate dramatically and turned slightly negative in June, ending an eight-month surge. The Central Statistics Office's (CSO) Manufacturing Output Price Index rose by 0.6 per cent between May and June, but was 0.4 per cent lower than in June 2005.

The yearly rate of increase in the price of food products moderated as food prices remained virtually static in June, rising only 0.1 per cent over May. In annual terms, prices of computers, electrical goods and telecommunications fell sharply in annual term, overcoming positive inflation for food products and output from mining and quarrying activities.

The overall index, which measures the price of goods leaving the factory gate, fell consistently since 2001 as globalisation drove down the cost of many manufactured goods. But it rose sharply last autumn as manufacturers passed on the effect of the preceding summer's oil price increases to customers.

Annual factory gate inflation has decelerated from 3.6 per cent in March rate to -0.4 per cent in June, reflecting a deceleration in the annual rate of increase in energy prices. CSO figures have yet to reflect the impact of more recent increases in oil prices. In response to rising tensions in the middle east, the price of oil reached an all time high of $78 (€62) a barrel last week.