The 2.4% headline inflation is down from the 2.5% annualised figure of the last two monthly Consumer Price Index prints.
The figure has come in below market expectations of the CPI holding steady at 2.5% for another month.
The Australian Bureau of Statistics said annual inflation for food and non-alcoholic beverages had softened to 3.1% in February, down from 3.3% in January.
Electricity also saw a 13.2% annual fall in prices to the end of February, thanks to the ongoing effects of federal and some state government energy rebates.
But this was excluded in the all-important annual trimmed mean measure which also dropped to 2.7% in February, down from 2.8% in January.
Inflation 'softening', ABS finds
Rental growth also fell to a 5.5% annual growth rate, down from a 5.8% rise in January.
This was the softest annual growth in CPI rental prices since March 2023, as the pressure on vacancy rates eases across most capital cities.
Insurance prices, which have been a big contributor to inflation, rose 7.6% in the 12 months to February.
That's well down from the peak of 16.5% 12 months ago.
Education costs also rose in February, particularly for pre-school and primary school education, reflecting fee increases at the start of the school year.
What will inflation mean for interest rates?
The RBA will take note of the falling trimmed inflation figure when it meets for the second time this year on Monday 31 March-1 April.
It will be the first meeting under the RBA's new structure where a designated Monetary Policy Board will consider whether to move Australia's official cash rate.
The rate was cut for the first time in more than four years at the RBA's last board meeting in February.
It's now at 4.10%, down 25 basis points on the long-standing rate of 4.35% that had been in place since November 2023.
Since then, a flurry of banks and lenders have passed on the cut to variable home loan interest rates, as well as lowered rates on savings accounts.
When will the cash rate be cut again?
Few analysts expect there will an immediate follow-up interest rate cut on 1 April.
Markets are currently pricing in only an 8% chance the Monetary Policy Board will lower the cash rate to 3.85% next week.
The board will no doubt be considering what was handed down in the federal budget on Tuesday night.
- What's in the federal budget for homebuyers?
- What's in the federal budget for pensioners?
- What's in the federal budget for parents?
- What's in the federal budget for savers?
But many banks and economic analysts have agreed the government's new spending plan will have little impact on the RBA's monetary easing pathway.
However, it could be said deficit spending indicates a government not in cahoots with the RBA's inflation fight.
Yet it seems most of the uncertainty is coming from outside Australia.
Earlier this month, RBA chief economist Sarah Hunter acknowledged the board was making decisions in an "uncertain environment".
Global markets have been shaken by US President Donald Trump's trade tariffs and other economic policies, which have prompted the board to assess implications for Australia.
She said he RBA’s policy decisions are being made in the context of "various risks and uncertainties".
When do the big four banks tip another interest rate cut?
Australia's three largest banks - CommBank, Westpac, and NAB - are forecasting a cut each quarter, taking the cash rate to 3.35% by the end of 2025.
ANZ remains the outlier, predicting just one more cut in August, taking the cash rate to 3.85%.
Many commentators are tipping the next rate cut will come at the board's May meeting.
By this time, the new-look board will have the more telling March quarter inflation data, due to be released on 30 April.
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