The TD Securities and Melbourne Institute (MI) released their monthly inflation gauge data on Monday. Australia's inflation gauge was up 0.2% in December, after a 0.1% gain in November.
On a yearly basis, inflation gauge rose 2.0% in December from 1.8% in November.
The rise was mainly driven by rises in prices for fruit and vegetables, holiday travel and accommodation, and meat and seafood.
The trimmed mean of the inflation gauge declined to 1.7% year-on-year in December from 1.8% in November.
"We expect headline inflation to increase by 0.3 per cent in the quarter, to be 1.7 per cent higher than a year ago, while we forecast underlying inflation to increase by 0.5 per cent in the quarter, for an annual rate of 2.0 per cent. These forecasts are entirely consistent with the RBA's November projections," Chief Asia-Pac Macro Strategist at TD Securities, Annette Beacher, said.