The annual inflation rate has fallen again, dropping to 1.7 per cent in February, the lowest in four years.

Prices bounced back after the January sales, but the monthly rise was less than the same month last year, meaning the annual rate of inflation fell for the sixth month in a row.

The Taoiseach said the fall in the inflation figures and the increase in employment last year, shown in Thursday's jobs figures, "indicates very strongly a positive economic outlook for this year". However, Fine Gael and Labour last night insisted that "rip-off Ireland" was still alive.

The Central Statistics Office figures show the monthly rise in inflation in February was 0.8 per cent, slightly lower than the 1 per cent increase in the same month last year. Much of this was accounted for by the normal seasonal bounce-back after the January sales, with clothing and footwear prices rising 12 per cent during the month, following a 14.8 per cent fall in the same category during January.

Other notable moves during the month were a 2.1 per cent rise in communications charges due to an increase in line rental costs, while health prices rose 0.8 per cent due to a rise in doctors' and dentists' fees.

Education prices fell 0.3 per cent due to a decrease in education and other training prices.

Over the past year, the main causes of inflation remain services sectors such as health (up 6.9 per cent annually), education (5.9 per cent) and communications (5.2 per cent). Alcohol and tobacco prices are up 4.4 per cent annually.

The most significant decrease was the 4.5 per cent annual fall in clothing and footwear prices, which probably reflects the impact of the rising euro, the move of production to low-cost locations and fierce competition between retailers.

The figures also show that the rapid convergence in Irish inflation to the level of our EU partners continues. Using the EU measure of inflation, which excludes the impact of mortgage rates, the Irish rate was 2.2 per cent in February, with the latest euro-zone figures showing an average of 1.8 per cent in the 10 single-currency states in January.

However, Fine Gael finance spokesman Mr Richard Bruton said the data showed that "rip-off Ireland is alive and well with significant price rises in essential services like health, education, communications and utilities".

While the annual rate of inflation was now at 1.7 per cent, when exceptionally low mortgage interest is taken out, the real figure is 2 per cent, he claimed.

He described the Tánaiste's establishment of a consumer strategy group as "laughable".

"This quango will report back in nine months, which means a further nine months of soaring prices," he said.

Labour spokeswoman Ms Kathleen Lynch said that the overall level of prices in the Republic was still well above the European average - 12 per cent in the last Forfás study.

"With inflation in Ireland still among the highest in the EU, the Forfás prediction that Ireland will have the highest price levels in Europe this year is likely to prove accurate."