By Adrian Black and Jacob Shteyman

The Reserve Bank’s efforts to curb inflation are heading in the right direction, with monthly inflation continuing downward, but it likely won’t be enough to force a rate cut next week. 

The monthly consumer price index fell 10 basis points to 2.4 per cent in the year to February, in line with expectations and after holding at 2.5 per cent for two months.

The Reserve Bank’s preferred measure of price growth, the trimmed mean, also fell 0.1 per cent to 2.7 per cent.

“This was down slightly from the 2.8 per cent inflation in January and has remained relatively stable for three months,” ABS price statistics head Michelle Marquardt said.

The easing price growth offered no surprises to traders and analysts, who expect the RBA to wait for the quarterly figure before considering the next interest rate cut.

“It’s doubtful this will be enough to see the RBA ease again at its April 1 meeting, preferring to wait and see the more reliable March quarter CPI data ahead of its May meeting where we do expect it to ease again,” AMP chief economist Shane Oliver said.

The federal budget, released on Tuesday, would make it harder for the central bank to bring inflation under control, even though its cost-of-living measures would help lower measured inflation, he said.

“But the new stimulus, the shift from surplus to deficit and average 5.5 per cent year-on-year projected growth in federal spending to 2028/29 will boost demand in the economy,” Dr Oliver said.

“We don’t think it precludes more rate cuts, but it means rates will be higher than would otherwise have been the case.”

Proposed income tax cuts unveiled in the budget and introduced to parliament on Wednesday would support household spending in the medium term if legislated, said JP Morgan economist Ben Jarman.

But the policy shouldn’t have a material bearing on the RBA’s near term decision-making, given it wouldn’t come into effect until mid-2026.

“We continue to forecast a rate cut in May,” Mr Jarman said.

The top contributors to price growth over the year to February were food and non-alcoholic beverages, up 3.3 per cent, housing, up 2.1 per cent and alcohol and tobacco, up 6.4 per cent.