Australian inflation slows giving rate cut hopes a lift

Australian inflation has slowed more quickly than expected, boosting optimism of a rate cut next month.

Consumer prices rose by 0.1% in the first three months of the year compared with the previous quarter, the statistical office said.

The annual rate of price growth was 1.6%, well below the 2.1% figure forecast by most analysts.

There have been increasing calls for a rate cut as Australia's economy has slowed, hurt by weaker global demand.

"This just goes on to reaffirm there is little inflationary pressure in the economy and the Reserve Bank of Australia (RBA) remains on course to cut interest rates," said Spiros Papadopoulos of National Australia Bank.

"The RBA will probably wait and see how the economy responds to the rate cut they are likely to put place in May. There is a probability of further cuts based on ongoing weak data down the track."