Consumer prices rose 1.7 per cent in the year to January, new data from the Central Statistics Office showed today.
This follows an annual rise of 1.3 per cent recorded the previous month.
The yearly increase was driven by a 9.6 per cent rise in the cost of housing, water and fuels. Transport also increased year on year by 3.1 per cent, while the cost of communications was 3 per cent higher.
Clothing and footwear prices fell 4.3 per cent, while furnishings and household equipment were 3 per cent cheaper. Education also fell in price, recording a decline of 3 per cent.
The Irish Congress of Trade Unions (Ictu) described the annual rise as part of a "very worrying upward trend".
"People are now being squeezed between the pincers of falling pay and remorseless price rises," said Congress economic adviser Paul Sweeney.
"Yet Government continues to attack peoples' incomes. They used to justify this with the claim that prices were falling sharply. But this is the sixth straight month of rising prices."
On a monthly basis, consumer prices fell 0.2 per cent from December, less than the 0.6 per cent decline recorded in January 2010.
Clothing and footwear declined 9.3 per cent compared to December as winter sales lowered prices. The cost of furnishings and household maintenance was down 2.6 per cent.
However, this was offset by a rise in the cost of health of 3.3 per cent, driven by rising hospital services. Alcohol and tobacco were also more expensive, rising 1.5 per cent.
Ibec said the increase in the consumer price index was "largely as expected", and predicted the rate of inflation will increase further over the coming months, before subsiding in the second half of the year.
"Commodity prices have continued to edge higher in recent months and this is evident in the latest figures: food prices were up 0.3 per cent in the month, while fuel prices rose by a further 2 per cent. Petrol prices have now increased by 15 per cent over the past year and diesel prices are up 18 per cent," said chief economist Fergal O'Brien.
The Small Firms Association said that although the declining prices for clothing, footwear and household goods are benefiting consumers, but they are not helping small businesses.
"The Government needs to take firm action to reduce the costs it imposes on the economy, so that it is not having knock-on negative impacts on small businesses who are fighting for survival," said SFA director Avine McNally.
The EU Harmonised Index of Consumer Prices (HICP), which excludes items such as mortgage interest, fell by 0.3 per cent in the month, and rose 0.2 per cent on the year. This was the first year-on-year increase in the index since February 2009.
“Until this latest figure, Ireland was the only country within the EU-27 to have a negative reading on the HICP, reflecting the severity of the economic downturn,” Bloxham chief economist Alan McQuaid said.
