Australian inflation slows to 6.8 per cent

Food prices were a significant contributor to Australia's annual inflation increase. Photo / 123RF

Inflation rose 6.8 per cent in the 12 months to February, suggesting Australia’s economy is on the track to normalisation.

It’s the second consecutive month of lower annual inflation after the 8.4 per cent peak in December and the 7.4 per cent rise in the 12 months to January – but the figure is still well above the Reserve Bank of Australia’s aim of 2 to 3 per cent.

The Reserve Bank will be looking closely at the latest data – released on Wednesday by the Australian Bureau of Statistics – when it meets next week to consider whether to raise interest rates for the 11th consecutive time.

The most significant contributors to the annual inflation increase to February were housing (up 9.9 per cent), food (8 per cent), transport (5.6 per cent) and recreation and culture (6.4 per cent).

ABS head of statistics Michelle Marquardt noted the annual increase for the housing group was lower than January (10.4 per cent).

“New dwellings grew 13.0 per cent in the 12 months to February which is the lowest annual growth since February 2022 as price rises for building materials continue to ease. Rent prices rose again due to the tight rental market, maintaining the 4.8 per cent annual growth recorded in January,” she said.