Price growth above 3% may increase demands for higher wages and hamper talks on a national pay agreement. "The outlook for the remainder of the year and next year is for some acceleration in services sector inflation, " the Central Bank reported last week. According to the Central Bank, inflation will speed up due to increased consumer spending and continued tightness in the labour market. The bank expects wages to rise by 3.25% this year.

Clothing and footwear prices climbed 1.9% in March from February, according to the latest . gures published by the Central Statistics Office. Consumer prices, which include mortgage-interest payments, increased 0.4% in March from the previous month and were up 3.5% from a year earlier.

Mortgage interest payments rose 1.2% last month after the European Central Bank raised its benchmark rate by 0.25% to 2.5%.