The Bureau of Statistics said the Consumer Price Index for the three months to March rose by a higher than tipped 1.3 percent compared to 0.7 percent in the previous quarter.

The result compared to the consensus of analyst forecasts of a 1.1 percent quarter-on-quarter, with forecasts ranging from 0.8 percent to a high of 1.3 percent.

The quarterly rise in prices was the largest since June 1995, and in annual terms was the highest since March 1996, apart from a one-off spike caused by a new goods and services tax in September 2000.

The annualised rate of 3.4 percent is also above the Reserve Bank of Australia's target range of two to three percent.

Contributing most to the overall increase in the March quarter were an 8.6 percent rise in the cost of automotive fuel, an 11.7 percent increase in vegetable prices and an 11.8 percent rise for pharmaceuticals.

Petrol prices were one of the biggest contributors to the annual rate, rising 17.4 per cent over the year while vegetable prices were pushed 25.1 percent in a year because of drought.

The rises were partially offset by falls in the cost of furniture (down 2.4 percent), audio visual and computing equipment (down 4.4 percent), women's clothing (down 2.0 percent) and overseas travel (down 1.2 percent.)

SPACE.WIRE