The annual rate of inflation is staying well below the Reserve Bank's two to three per cent target, leaving the door wide open for a rate cut this week.
Consumer prices were up 0.3 per cent in April, following a 0.4 rise in March, according to the TD Securities/Melbourne Institute monthly inflation gauge.
However, the annual rate of inflation was 1.4 per cent in April, the fifth consecutive month it was below two per cent.
TD head of Asia Pacific research Annette Beacher said the differences between the solid monthly rise and weak annual rate can be explained by inflation being quite buoyant this time last year, so it was rising from a low base.
"For the RBA Board meeting tomorrow, the combination of sub-trend GDP growth, lower terms of trade and a low inflation environment all tilt the odds towards the RBA delivering a 25 basis point cut to two per cent," she said.
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