IRELAND HAS THE lowest annual rate of inflation in Europe, new figures reveal.

Standing at 1 per cent in July of this year, this is far below the highest rate of inflation, which is held by Estonia at 5.3 per cent.

Also with low interest rates are Slovenia (1.1 per cent) and Sweden (1.6 per cent).

Inflation fell in 16 member states, rose in nine and remained stable in two compared with June 2011.

The figures were released by Eurostat, the statistical office of the European Union.

Annual inflation in the Euro area was down from 2.7 per cent in June to 2.5 per cent in July 2011, although a year earlier the rate was 1.7 per cent.

Overall, annual EU inflation was 2.9 per cent in July 2011, down from 3.1 per cent in June.

In Ireland, monthly inflation was 0.2 per cent in July 2011, while it was 0.6 per cent overall in Europe.

Transport (5.5 per cent) and housing (5 per cent) saw the highest annual rises in inflation, followed by alcohol and tobacco (2.9 per cent).

Clothing (-2.9 per cent), communications (1.6 per cent) and recreation and culture (0.4 per cent) saw the lowest.

When it came to monthly rises in inflation, recreation and culture (1.2 per cent), hotels and restaurants (1.1 per cent) and housing and transport (0.6 per cent) showed the highest figures whereas clothing (-14.2 per cent) showed negative growth.