The rate of inflation fell to 4.7 per cent in December, according to the Central Statistics Office.
The CSO's consumer price index attributes the fall in inflation to annual retail sales.
Decreases in the price of clothing and footwear of -6.2 per cent and a -2.3 per cent drop in furnishings, households equipment and routine houshold maintenance saw the inflation rate fall to 4.7 per cent from November's 5 per cent.
Despite these falls, consumer prices rose by 0.1 per cent in December, compared to an increase of 0.4 per cent in December 2006.
December saw increases of over 15.1 per cent in housing, water, electricity, gas and other fuels. Food prices and other non-alcoholic beverages saw a 6.3 per cent increase.
The most significant monthly price changes were increases in alcoholic beverages and tobacco (+1.9 per cent); food and non-alcoholic beverages (+0.9 per cent); housing, water, electricity, gas and other fuels (+0.7 per cent); and a decrease in clothing and footwear (-3.4 per cent).
Fine Gael deputy leader and Finance Spokesman Richard Bruton said the figures were "a serious source of worry for the economy."
"The grim truth is that inflation in sectors operated or regulated by the Government in Ireland has been rising at more than twice the rate of the rest of the Eurozone.
The Government has failed to deliver the needed efficiencies in its own operations or to regulate key sectors that exhibit uncompetitive trends," he concluded.
Labour's Spokesperson on Consumer Affairs, Senator Brendan Ryan, said "the latest Consumer Price Index shows how food prices have gone through the roof over the last 12 months and remain a concern for families who are struggling to make ends meet".