Ireland's headline inflation rate eased marginally in May, to the slowest pace in almost three years, according to new figures from the Central Statistics Office.

The Irish inflation rate remained flat at 0.5 per cent during April, but eased to 0.4 per last month.

While consumer Prices in May, as measured by the Consumer Price Index (CPI), decreased by 0.1 per cent in the month they were 0.4 per cent higher on the year.

The divisions which caused the largest upward contribution to the CPI in the year were restaurants & hotels, alcoholic beverages & tobacco, miscellaneous goods & services and food.

Miscellaneous goods and services increased due to higher health insurance premiums.

The divisions which caused the largest downward contribution to the CPI in the year were transport, furnishings and  household maintenance.

Transport fell mainly due to lower petrol and diesel prices, which was partially offset by an increase in airfares.

The data showed education prices rose 4.8 per cent on the year, while the cost of alcohol, beverages and tobacco were 4.3 per cent higher than May last year.

Housing, water, electricity, fuels fell 0.6 per cent due to lower mortgage interest repayments and a decrease in the cost of home heating oil.

The EU Harmonised Index of Consumer Prices (HICP) remained unchanged in the month.

Business group Isme said the low inflation figures mask the reality for businesses where the effect of legacy costs is damaging competitiveness.

"The difference between a new rental and existing lease costs can be as high as 50 per cent, and new employees can be employed at up to 25 per cent below current rates of pay," according to Isme chief executive Mark Fielding.

He said tough decisions needed to be made on general government spending, local authority funding, rent reviews and labour market reform, which will reduce business costs, stimulate growth and job creation.