The annual inflation rate rose to 2.7 per cent last month, pushed up by increases in the cost of private education and higher fuel bills.
The increase in October reversed the declining trend seen in the previous two months and forthcoming increases in ESB and gas prices are set to add to inflationary pressures in the months ahead. The figures from the Central Statistics Office show that prices rose by just 0.1 per cent in October, the same increase as September.
However, because prices had actually fallen in October of last year, the annual rate has increased to 2.7 per cent from 2.5 per cent in September.
Rising education costs were a key factor in the monthly rise, with the cost of fee-paying secondary education up 10.4 per cent on last year and the smaller fee-paying primary sector showing increases of 13.4 per cent.
The cost of fee-paying third-level courses and play schools is also on the rise. Childcare costs are also increasing sharply, up 3 per cent on the month and now running 8.4 per cent ahead of last year.
Further underlining continued inflation in the services sector, health costs are running 5.8 per cent up on the same month last year, with pressure recently from higher private charges in hospitals. Overall inflation in the services sector is running at 3.7 per cent.
However, the inflation rate for goods is running at a more moderate annual rate of 1.6 per cent. The price of some goods is actually falling - such as clothing and footwear, down 2.5 per cent on the year reflecting fierce competition and the impact of the rising euro. Food prices, meanwhile, are running 0.4 per cent below 2003 levels.
In the months ahead prices will be pushed up by rising energy costs. However, the euro's strength will help to hold down inflation by pushing down the price of imports.
The euro's rise yesterday prompted IIB Bank to revise down its inflation forecast for next year to 2.8 per cent. Bloxham Stockbrokers, however, are predicting that inflation will break 3 per cent by the end of this year and will average that level for 2005.
Business lobby groups IBEC and ISME both called on the Minister for Finance, Mr Cowen, to avoid indirect tax increases in the Budget to help to hold down the inflation rate next year.
