The Consumer Price Index (CPI) has increased by 0.4 per cent in the March quarter, following on from a 0.2 per cent increase in December, according to the latest figures released by the Australian Bureau of Statistics (ABS).

The hike in costs was driven by new dwelling purchase (1.7 per cent), pharmaceutical products (7.6 per cent), tertiary education (6.5 per cent) and tobacco (3.7 per cent).

The inflation increase was offset by the falling costs of international travel and accommodation (-5.2 per cent), furniture (-6.8 per cent) and fruit (-7.0 per cent).

The March quarter increase sees the CPI finish up at 2.5 per cent through the year to March, well within the Reserve Bank’s target band of between 1 – 3 per cent.