CLOTHING, heating and driving all got more expensive last month, pushing up the overall cost of living.
After a couple of months of reduced inflation, prices rose by 0.6pc in August and are now 2pc higher than a year ago, new figures from the Central Statistics Office show.
The end of the summer sales contributed to inflation with clothes and shoe prices rising 6.6pc in the month, while petrol and diesel prices both rose by more than 3pc.
However, some homeowners got relief as mortgage repayments fell by 3.2pc in August due to a drop in European Central Bank interest rates, which affects tracker mortgages.
Inflation remains lower than the EU average of 2.5pc and behind that of our nearest neighbour Britain, where prices have risen by 2.6pc.
Economist Alan McQuaid of Merrion Capital predicted that inflation would be slightly lower than last year at around 2pc, with external forces, such as energy, the main impetus behind increases.
"Domestic inflationary pressures are likely to remain subdued for some time," he said.
Davy stockbrokers predicted that hikes in electricity and gas prices this autumn would further push the cost of living up.
"With electricity and natural gas accounting for 3.5c of the consumption basket, the mooted increases could push up the Consumer Price Index by 0.2pc by October," said Davy economist Conall MacCoille.
Food prices, meanwhile, rose marginally last month and are now 0.4pc higher than a year ago thanks to hikes in the price of potatoes, vegetables, beef, lamb and sugar.
However, alcohol prices continued to fall, dropping 1.6pc in the past 12 months, with beer prices decreasing even more sharply by 6.4pc.
And healthcare costs also came down last month helped by a 2.2pc fall in prescription drug prices.
The price of services has risen by 2.3pc in the last year, whereas goods inflation was lower at 1.6pc.
The Irish Small and Medium Enterprises Association accused the Government of sleepwalking the economy into further difficulties.
"Today's inflation figure will only be added to in the coming months as this inept Government foists energy and transport cost increases on an already tormented business community," said its chief executive Mark Fielding.