HIGHER petrol prices have helped to push up the rate of inflation, which is now running at 1.9 per cent.

The figures were published just a day after the Central Bank warned about the risk of a pick up in inflation.

The Central Statistics Offices figures show that in mid November inflation was running at 1.9 per cent up from 1.5 per cent in mid August.

However, the average for all of 1996 was 1.6 per cent, meaning Ireland is still on course to meet the Maastricht inflation criteria.

The Central Bank is determined to control inflation, as next year's figures count towards qualification for monetary union. Most market analysts do not believe the figures will prompt an immediate increase in interest rates, although some are forecasting a small rise early in the new year.

Between mid August and mid November this year, prices on average rose by 0.5 per cent. By far the most significant increase was a rise in transport costs, mainly accounted for by higher petrol prices. The other main factors were the rise in mortgage rates and insurance costs. Falling food prices and the final phase in the abolition of educational fees helped hold down the quarterly rise.

On the basis of the figures, Ireland still seems on course to meet the Maastricht inflation criteria, although the Central Bank gave a clear warning in its latest bulletin this week of the danger of rising inflation. The Maastricht rules say that the inflation rate must be no more than 1.5 percentage points above the average of the lowest three states.

A slightly different EU measure than the normal consumer price index is used in order to compare the figures from across Europe. This showed that the inflation rate rose from 2.2 per cent in the third quarter to 2.3 per cent in November. While the rate may pick up next year, market forecasters believe that it should remain below the Maastricht ceiling which is likely to be about 3 per cent.

Higher inflation as well as growing credit in the economy have raised the possibility of higher interest rates - at least in the money markets.

However, economists are still fairly sanguine about the risks to Irish interest rates. Dr Dan McLaughlin, chief economist at Riada Stockbrokers, said he felt an interest rate rise was unlikely. "At 1.9 per cent, inflation is still one of the lowest in the EU," he said.

He added that the Central Bank was right to be worried about the inflation figures. "The effective exchange rate and world inflation are the key determinants of Irish inflation. And the effective rate is up 3.5 per cent this year despite our fall against sterling. As long as that situation remains I doubt very much if the authorities would raise rates."

Nevertheless, the Bank is likely to keep a close eye on credit growth and some brokers do expect higher rates. Last night, Bloxham stockbrokers predicted the Bank would push up rates. NCB stockbrokers forecast that short term interest rates would stay where they were for a protracted period.