Irish consumers are now paying more for food and rental accommodation than consumers in any other euro zone country, according to a study by the National Competitiveness Council (NCC).
The Council's Statement on Prices and Costs, which compares Irish prices to EU and other developed countries, also found Ireland is the second most expensive country in the 11-state euro zone for restaurants and pubs.
The report said the average price of Irish goods and services increased by 22 per cent relative to our main trading partners in the four years to May 2004.
It found Ireland's consumer price inflation has exceeded the euro zone and EU countries for the past seven years - increasing by 17.5 per cent between December 1999 and December 2003.
By comparison, consumer price inflation, in the 15-country EU as a whole, increased by only 8.4 per cent over the same period.
Between 2001 and 2002, Ireland overtook the UK and Sweden to become the third most expensive country in the EU for consumer goods and services.
The report says that "by 2003 Ireland was almost on a par with Finland as the most expensive country within the euro zone, both countries being significantly more expensive than the next group of euro zone countries".
The report said restaurants and pubs were the main contributors to Irish inflation in the five years to January 2004 giving rise to 25 per cent of total inflation for the period.
Rising alcohol and tobacco prices accounted for 13 per cent of total inflation, while housing, water and fuels accounted for 11 per cent.
The report said: "Most Irish inflation over this period has been generated domestically and is not as a result of rising prices for imported goods".
NCC chairman Mr William Burgess said: "Policy-makers must take action to reverse this acceleration and eliminate the inflation differential with the rest of the euro area.
He said: "At worst, the gap between Irish and average euro area prices should not be allowed to widen further."
