Inflation picked up slightly in November, but remains low enough for the Reserve Bank of Australia to cut the cash rate again if it wants to.
The TD Securities/Melbourne Institute Monthly Inflation Gauge rose 0.2 per cent in November, following a 0.1 per cent rise in October.
In the 12 months to November, prices rose 2.4 per cent, which is higher than the 2.1 per cent annual rate recorded to October.
The price of fruit and vegetables, furniture, newspapers, books and stationary rose during November, TD Securities head of Asia Pacific research Annette Beacher said.
However, the price of holiday travel, accommodation, automotive fuel, alcohol and tobacco fell during the month.
While the inflation rate remained in the bottom half of the RBA's two to three per cent target range, Ms Beacher said the central bank was likely to leave the cash rate on hold at 2.5 per cent for now.
"While inflation is expected to remain within the bottom half of the RBA band until mid-2014, this is unlikely to be a trigger for introducing a fresh explicit easing bias next year," she said.
Ms Beacher said the Australian dollar was likely to be the RBA's main focus for now.
"We expect all forthcoming RBA communiques and speeches to continue talking down the AUD rather than hint at rate cuts," she said.
