CONSUMER PRICES climbed 1.6 per cent in the year to July, new figures from the Central Statistics Office show.

Excluding mortgage interest, the price level was 2.3 per cent higher than one year earlier.

These annual increases were accounted for by price rises that took place in the second half of last year. Since March 2012 there has been no increase in the overall price level.

The annual increase was driven by a rise in the cost of education, which was 9.4 per cent higher, and transport, which recorded a 7 per cent hike.

Inflation in education prices has been higher than any other category in either goods or services for more than a decade.

The cost of furnishings and household equipment was down by 2.4 per cent over the year, and the cost of recreational activities also declined, falling 1.6 per cent.

Core inflation, which excludes some volatile items such as energy, rose by 1 per cent over the year, compared to 2 per cent in the euro area.

“Outside of energy there is little in the way of price pressures in the Irish economy, with sectors dependent on the domestic consumer continuing to see price deflation,” Goodbody chief economist Dermot O’Leary said.

On a monthly basis, prices fell marginally, down 0.1 per cent.

The 5.1 per cent decline in the cost of clothes and footwear due to the traditional summer sales and a 1 per cent fall in prices for alcohol and tobacco were partly offset by increases in transport, where prices were 1.3 per cent higher due to rising airfares.

The figures showed the annual rate of inflation for services was 2.5 per cent in the year to July, while goods were 0.4 per cent higher.

Isme, the Irish Small and Medium Enterprises Association, has called on the Government to cut the cost of public services, warning that the competitiveness of Irish businesses would be “decimated”.

“Domestic inflationary pressures are likely to remain subdued for some time to come. Continued weak consumer demand will continue to put downward pressure on prices in the coming months, although any indirect tax changes to be announced in budget 2013 will add to inflation,” said chief executive Mark Fielding. “There needs to be recognition by Government that cost competitiveness is crucial to the future of business and the future of the economy.”