"Prices on average, as measured by the CPI, were 1.3 percent higher in December compared with December 2009," the Central Statistics Office (CSO) said in a statement.

Compared with November, Consumer prices increased 0.2 percent in December.

"This compares to a decrease of 0.5 percent recorded in December of last year," the CSO noted.

The spike in inflation comes as indebted Ireland readies for general elections expected in March.

Earlier Thursday, a top Irish think-tank downgraded its growth forecast for the country's embattled economy to 1.5 percent in 2011, in another blow to the eurozone nation after a huge bailout.

The Economic and Social Research Institute (ESRI) revised down its estimate from its October forecast, when it had predicted 2.25 percent gross domestic product growth for Ireland this year.

The latest forecast was made after Dublin was forced in November into accepting a package of financial aid for its economy which will include a contribution of 67 billion euros (90 billion dollars) from the EU and IMF.

It also predicted consumption in Ireland would fall this year and in 2012.

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