Inflation has increased by 0.2 per cent in March, marking only a 2.1 per cent increase to the Inflation Gauge, according to the TD Securities – Melbourne Institute Monthly Inflation Gauge.

The low-level inflation growth in March follows a flat result in February, and a 0.3 per cent jump in January.

Contributing to the March inflation growth, alcohol, tobacco, footwear and clothing all recorded significant increase. These were offset by falls in fruit and vegetables, household appliances, audio, visual and computing equipment.

The trimmed down mean of the Inflation Gauge rose by only 0.1 per cent in March, ending the year at 1.8 per cent higher than the same time last year, well and truly below the RBA’s inflation target band.

“With this March report we have finalised our March quarter CPI forecasts. We expect headline inflation to increase by 0.5 per cent in the quarter, to be 2.6 per cent higher than a year ago,” Annette Beacher, Head of Asia-Pacific Research at TD Securities said.

“We expect next month’s RBA Board meeting to be a benign event. We are of the view that the cash rate should remain at three per cent, with the Bank’s clear easing bias remaining on the table.”