Inflation rose again to 5.4 per cent in March, up from February's 5.3 per cent.

Higher food prices as a result of the foot-and-mouth crisis contributed to an increase of 0.8 per cent in March, along with significant price rises in other areas such as motor fuel, housing and tobacco.

Motor and house insurance and parking meter charges were also higher than in February.

The most significant monthly rises were in tobacco, which was up 1.4 per cent, food (up 1.1 per cent), housing (up 1.1 per cent), transport (up 1 per cent), clothing and footwear (up 0.9 per cent), household goods (up 0.8 per cent), and alcohol (up 0.7 per cent).

Over the year, housing was up some 25 per cent as higher interest rates, rising insurance and soaring rents fed through to the index.

Food rose 6.5 per cent over the 12-month period and the price of drink rose by 4.9 per cent.

Food prices were pushed by increases in prices for lamb, pork and bacon in particular, as the shortages due to foot-and-mouth caused price rises.

Increased exports to Britain to make up for the massive slaughter there also exacerbated shortages, pushing up prices here.

According to Mr Jim O'Leary, chief economist at Davy Stockbrokers, the overall foot-and-mouth impact on inflation in March was 0.2 per cent.

Other food prices rose, particularly the cost of eating out, as well as the price of poultry, fresh vegetables, fresh fruit and soft drinks.

The price of potatoes and breakfast cereals fell.

Higher oil prices fed through to increased costs for fuel and light, up 4.3 per cent over the year.

But clothing and footwear saw a fall of 4.2 per cent over the year.

On the EU-harmonised basis, prices also rose 0.8 per cent on the month, bringing the annual rate to 4.1 per cent. Both the Netherlands and Portugal had rises of 4.9 per cent in February.

Fine Gael finance spokesman Mr Jim Mitchell said the figures were a cause for concern and a predictable result of the Government's policies.

"The rise in food prices is of particular importance. This is the second monthly rise in succession and is likely to lead to further demands for high pay increases.

"If our competitiveness continues to be eroded, on top of the downturn in the US economy and the foot-and-mouth crisis, a rise in unemployment could be a consequence."

The Labour Party agreed the rise in inflation was a worrying trend.

According to the party's spokesman on social, community and family affairs, Mr Tommy Broughan, it is now "clear that the Government's pre-Budget commitment to ensure that inflation is kept under control in 2001 is very hollow".