Sustained price increases in the services sector pushed inflation up to 4.8 per cent last month, the highest rate seen since April and more than double the euro-zone average.

The annual rise is most remarkable in the education sector, where prices have increased by almost 14 per cent. Health services have become 10.2 per cent more expensive since November last year, while the cost of miscellaneous goods and services has risen by almost 8 per cent.

Economists said, however, that the average increase, which owes much to base effects such as sharp cuts in interest rates and falling oil prices last November, could have been higher.

Dr Dan McLaughlin, chief economist with Bank of Ireland, said he had been expecting annual inflation to touch 4.9 per cent this month, with a possible rise to 6 per cent in January when the full effects of the Budget were felt.

He has now reduced his January forecast to 5.7 per cent on the basis that goods price inflation is "subdued".

The divergence between goods and services inflation is most obvious in the clothing and footwear sector, where competitive factors have brought prices down by 5.7 per cent over the past year.

Friends First chief economist Mr Jim Power had also been expecting a more substantial increase but still believes that a rate of 6 per cent will be reached in the first quarter of 2003.

Mr Power warned that the State's persistently high inflation rate would make it difficult for the negotiators on a new pay agreement to marry their objectives.

"EU wage growth this year is likely to be around 2 per cent and, with Irish inflation likely to hit 6 per cent, there is clearly a yawning gap to be breached," he said.

Employers' group IBEC is similarly concerned, fearing the creation of "another cycle of cost-push inflation".

IBEC chief economist Mr David Croughan said inflation was likely to rise to 5.5 per cent in January before tailing off to 3.7 per cent by the end of the year.

Fine Gael finance spokesman Mr Richard Bruton blamed the Government for "resorting to increases in charges and prices to correct its own mistakes in public finances".

The leader of the Labour Party, Mr Pat Rabbitte, said the latest figures "dramatically illustrated" the pain being inflicted by the Government on the public.

Between October and November, average prices rose by 0.1 per cent, a minimal increase when compared to the 0.5 per cent rise recorded in the previous two months. Again, health and education were the biggest offenders, with the Central Statistics Office highlighting higher fees for adult education, language classes, doctors and dentists.

By contrast, prices in hotels, restaurants and pubs fell in November, suggesting that the changed tourist market has forced the sector to narrow margins.

Mr Austin Hughes, chief economist with IIB Bank, said he expected a "moderating trend" in inflation to become established next spring. He warned, however, that price increases could easily become "embedded" in the economy, damaging competitiveness in the long term.

Mr Hughes pointed to retail sales data for October that showed a 2.5 per cent cut in consumer spending, after a 5.8 per cent monthly gain in September. He said retail sales could be boosted by the 0.5 per cent rate cut delivered by the European Central Bank last week.

"Higher inflation and low interest rates are a recipe for higher borrowing that will sustain Irish household spending in the short term," he said.