Inflation levels have remained relatively flat in February, according to the TD Securities – Melbourne Institute Monthly Inflation Gauge.

The inflation flatline comes after a 0.4 per cent hike inflation in December, and a subsequent 0.3 per cent rise in January, ending in a 2.5 per cent increase over the year ended in January.

According to the report, inflation was driven by price rises for fruit and vegetables, which rose by 4.7 per cent,, automotive fuel and tobacco, while falls in holiday travel, accommodation, clothing and footwear offset the increases.

Annette Beacher, Head of Asia-Pacific Research at TD Securities, the March Quarter is set to see a 0.6 per cent increase in headline inflation.

“These outcomes generate annual inflation rates of 2.4 per cent and 2.2 per cent respectively,” Ms Beacher said.

“For the RBA Board meeting, there will be a lively debate about the recent capital expenditure survey, showing that mining investment growth is expected to be extended into 2013/14, investment in the services industry is expected to rebound.”