Prices jumped by almost 1 per cent last month, with analysts mainly blaming the increase on the European Central Bank's (ECB) decision last March to raise interest rates. Marc Coleman, Economics Editor, reports.

Opposition parties condemned the news, as the ECB's governing council meeting - which was held in Dublin yesterday for only the second time - hinted at a further rate rises next month.

The latest Consumer Price Index (CPI) indicates prices rose by 0.8 per cent in April over prevailing levels in March, once adjusted for normal seasonal patterns. The annual rate of CPI inflation in April was 5.1 per cent, the same rate of increase as in March.

Both monthly and annual increases were dominated by increases in the housing, water, electricity, gas and other fuels category,where prices rose by 2.7 per cent on the month and 22.8 per cent on the year.

When weighted by share of expenditure, interest rates was the dominant cause of the monthly change. "Mortgage interest added 0.4 per cent to the monthly increase, reflecting the passing on of the ECB quarter-point hike on March 14th. However, this did not drive up the annual rate of inflation because there was an identical increase in April 2006," Ulster Bank chief economist, Pat McArdle, said yesterday.

As measured by the Harmonised Index of Consumer Prices (HICP) - which excludes the impact of mortgage interest payments - inflation remained at 2.9 per cent, significantly lower than CPI inflation but a full percentage point above HICP inflation in the euro zone.

In annual terms, inflation was also strong for education services, at 5.3 per cent, for alcoholic beverages, at 5.5 per cent, and for the cost of eating in restaurants and hotels, where prices were up by 5.1 per cent year-on-year.

"Education . . . continues to feature cost increases well in excess of our euro-zone counterparts. In April, education inflation was running at 5.3 per cent, compared to a euro-zone average of 3.2 per cent," Deirdre Ryan of Goodbody Stockbrokers said yesterday.

Labour finance spokeswoman Joan Burton TD described the figures as a "black mark" against the Government's management of the economy. "The record of Fianna Fáil and the Progressive Democrats in controlling inflation stands in stark contrast to the 1.5 per cent rate they inherited from Labour's finance minister Ruairí Quinn."

Business lobby ISME chief executive, Mark Fielding, said all political parties were "falling over themselves telling us what they will do with the fruits of our strong economic growth, yet none of them are grasping the nettle of inflation.

The last thing the economy needs is for a price/wage spiral, reminiscent of the bad old days of the 1980s."