Inflation picks up in March 2017 quarter

Annual inflation has crept back into the Reserve Bank of Australia's 2-3 per cent target range for the first time in 3 1/2 years after a jump in education, health and transport costs.

CBA noted inflation is essentially comfortable.

"To be more precise, inflation has bottomed, and is lifting - albeit at a very modest pace.

"In fact inflation has only crept into the lower end of the Reserve Bank’s target 2-3 per cent inflation band for the first time in 2½ years."

Justin Smirk at Westpac noted rising fuel prices were there, as was the usual seasonal bump in education and health as well as the jump in power bills.

"And we did see a bit of a lift in dwelling prices (which now includes attached dwellings) associated with strong jumps in Sydney and Brisbane which added to the expected lift in electricity prices.

"However, as we noted in our preview, there was clear risk that the recent appreciation in the AUD, along with intense competition in the retail space, would limit the upside risks and, in fact, could present some downside risks to our forecasts.

"In the end this came through with falling prices for clothing & footwear household contents and services, car prices, audio visual & computing & international travel.

"All up core inflation rose just 0.4%qtr/1.8%yr with a six month annualised pace of just 1.8% year," he noted.