Inflation tipped into slightly negative territory last month, with lower prices for petrol, food and clothes among the main drivers behind the fall.
The Central Statistics Office said the price of the average basket of consumer goods and services in February was 0.1 per cent cheaper than it was a year earlier, while prices rose by 0.5 per cent when compared to January.
The drop in the annual rate was the first downward move in the index since the summer of 2010, and underlines the weak inflationary pressures that have been in place as the domestic and international economies have struggled.
Prices were 0.2 per cent higher on an annual basis in January.
A breakdown of the annual index showed strong February declines in a wide range of sub-sectors including toys, cosmetics and bicycles.
Home heating oil was 8 per cent cheaper annually, while petrol fell by 4.9 per cent.
The monthly rise of 0.5 per cent in February, which compared to an increase of 0.8 per cent a year earlier, owed much to clothing prices climbing by 6.1 per cent as seasonal sales ended. Air fares increasing 8.3 per cent.
Alcohol prices were weaker in off-licences and supermarkets. Conversely, alcohol and tobacco prices were higher on an annual basis, rising by 3.3 per cent.
Education prices rose by 4.6 per cent year on year.
The annual rate of inflation for services was 1.9 per cent in the year to February, while goods prices fell by 2.3 per cent.
When mortgage interest repayments were excluded from the services side of the index, prices were 3.1 per cent higher.
Inflation as measured by the Harmonised Index of Consumer Prices, the measure used across EU economies, was 0.1 per cent annually and 0.6 per cent in February.
“Domestic inflationary pressures in Ireland are likely to remain depressed for some time to come,” Merrion chief economist, Alan McQuaid wrote in a note.
Mr McQuaid highlighted sluggish domestic demand and said the residential property tax had hit disposable incomes hard.
“At this point in time it looks like deflation rather than inflation is the bigger threat to the economy, and it is not just in Ireland,” he added.
He expects the headline Irish inflation rate for 2014 to come in at close to the 0.5 per cent average recorded last year but cautioned that risks were “tilted to the downside”.
