Publicans reacted with anger after receiving letters from the brewer announcing the hike. The increase will bring the price of a pint to €4.04 on average, although it often costs a lot more in city pubs.
Diageo blamed the increase on soaring costs, with barley prices up 105pc in the last three years and energy costs up 102pc.
"The increase is the first in four years, and has been kept to a minimum, but has been necessitated by very significant increases in input costs," a spokesperson said.
Publicans said the increase will add 5c to prices after VAT.
A pint of stout currently costs €3.99 on average, while a pint of lager costs €4.35 according to the latest CSO data.
The Vintners Federation of Ireland, which represents 4,500 publicans, said the increase was a disaster for the industry and could cost thousands of jobs.
"Publicans all over Ireland are struggling to keep their doors open and it is inconceivable and desperately disappointing that Diageo has taken this step that will put further pressure on publicans and consumers nationwide," the VFI said in a statement.
The VFI said the pub trade had seen an 8pc drop in business in the last year, and many small local pubs would suffer from this move.
Diageo said the price increase had been kept to a minimum but was essential if they were to keep investing in the Irish pub trade. The increases will also affect Diageo beers sold in supermarkets and come into effect from October 30.