Ireland's headline annual inflation rate fell to 0.5 per cent in March, down from 1.1 per cent in February. However, on a monthly basis, consumer prices were up 0.4 per cent due to higher insurance premiums and fuel prices, according to new figures from the Central Statistics Office (CSO).

Merrion economist Alan McQuaid said the ending of winter sales was also a reason behind the rise in the monthly price index.

He said the main risk on the inflation front this year would come from the external side, and in particular the price of energy on the global market.

The most notable changes were in alcohol and tobacco prices, which increased 4.8 per cent, and goods and services which were up 2.5 per cent. Education costs rose by 4.7 per cent according to the Consumer Price Index, while transport costs were up 1.2 per cent as a result of higher petrol and diesel costs.

There were decreases in the price of communications, which fell by 5.5 per cent, and household equipment which was down 3.3 per cent.

The annual rate of inflation for Services was 1.2 per cent in the year to March, while goods decreased by 0.2 per cent. Services, excluding mortgage interest repayments, increased by 2.1 per cent in the year since March 2012.