The long period of low inflation may be coming to an end, figures released yesterday have revealed. The figures took many analysts by surprise, as the consumer price index rose 0.4 per cent in November from October and 1.6 per cent over the year, a larger gain than many had predicted,

Despite the rise, Ireland remains one of the lowest inflation countries in the EU. On a EU-harmonised basis Irish inflation was 1.1 per cent in the year to November, up from 0.8 per cent in October.

According to Mr Padhraic Garvey, senior economist at Riada Stockbrokers, the November increase was very large. "November is not a high inflation month," he noted. This is the first year in which inflation has been measured in monthly figures in the Republic. In Britain, where this system have been in use for a number of years, the largest November increase recorded is 0.1 per cent. Comparatively, this state's latest figure is very large, giving rise to concern, added Mr Garvey.

Mr Jim O'Leary, chief economist at Davy Stockbrokers, who correctly predicted the increase in inflation, said we are now beginning to see a pattern of year-on-year rises.

Mr O'Leary is expecting inflation to be running at over 2 per cent in February and at over 2.5 per cent by May. Overall core inflation next year will be around 2.75 per cent, he forecast.

Mr Garvey said he is expecting inflation of around 2.5 per cent next year, but if the next few months continue to show increases, it will be closer to 3 per cent.

However, inflation is not expected to get out of control, provided wage rises remain modest and within the bounds of Partnership 2000, according to Riada.

The Government chief whip Mr Seamus Brennan welcomed the inflation figures. He said the results are further evidence of the continued good performance of the economy. Ireland clearly remains well within the band set by the convergence criteria for monetary union, he noted.

However, Labour Finance spokesman Derek McDowell expressed concern over the figures.

"Maintaining a low inflation rate has been a cornerstone of our economic success. The increase recorded in November, while small in itself, gives cause for concern," he added.

The figures are likely to cause some concern at the Central Bank and may persuade it to delay interest rate cuts until later in the New Year. The poor figures also increase the prospect of a revaluation of the currency. Such a move may be necessary to restrain imported inflation.

However, Mr Austin Hughes, economist at Irish Intercontinental Bank stressed that price pressures are still limited. He insisted that the job losses in Clonmel suggest that cost competitiveness must be the keystone of economic policy in the single currency. "The figures should maintain pressure for lower interest rates and a softer pound," he said.

Overall price rises were very broadly based with increases in most commodities. Among individual price rises, clothing and footwear showed significant rises. However, these price had fallen by as much as 10 per cent and are still 8 per cent down on the year.