The annual rate of inflation rose to its highest rate in three years today by moving up from 4.8 per cent in January to 5.1 per cent in February.
But economists say the global downturn and inert domestic growth means the trend is likely to be downwards in the coming months.
The Consumer Price Index (CPI) for February shows consumer prices rose by 1 per cent in the month compared to 0.7 per cent in February 2002. As a result, the annual rate of inflation rose to 5.1 per cent, up from 4.8 per cent in January.
The most significant monthly price changes were increases in clothing and footwear (+12.5 per cent) and household furnishings (+2.2 per cent), following the end of the winter sales.
The most notable changes in the year were rises in alcohol and tobacco (+11.6 per cent), education (+10.4 per cent), health (+8.8 per cent), and restaurants, (+7.7 per cent).
"The underlying process is for a disinflationary periodahead so I think we're looking at the inflation rate headingdown throughout the year now," said Mr Danny McCoy, economist with the Economic and Social Research Institute.
Mr Austin Hughes, chief economist at IIB Bank agrees but warned of domestic cost pressures across a range of sectors - particularly in services.
"I think inflation is going to come down substantially over the balance of 2003 but it will come down because of poor conditions elsewhere rather than sharply reduced domestic cost pressures," Mr Hughes said.
Some analysts see inflation sinking to about 4 per cent by year's end; others predict it could be lower.
IBEC's chief economist, Mr David Croughan, noted that in important areas of consumer spending monthly inflation remained low with food at 2.5 per cent, electricity, gas and other fuels at 2 per cent.
Mr Croughan said that he expected inflation to begin to fall in the second quarter of the year as lower wage increases and the impact of a strong exchange rate and low international inflation began to bite.