CANBERRA - Treasurer Wayne Swan has welcomed a fall in inflation but says many Australian households are still doing it tough.
"These are very much welcome figures," he said on Tuesday after the release of an Australian Bureau of Statistics quarterly report on inflation.
"But we do know that many households are doing it tough."
The chances of an interest rate cut at next week's Reserve Bank of Australia (RBA) board meeting were boosted by the March quarter numbers.
The annual consumer price index (CPI) tumbled to 1.6 per cent - the lowest rate in more than two years. Underlying measures of inflation, the central bank's preferred measures of price pressures, were also benign.
"Contained inflation is a reminder of our strong economic fundamentals that have put the Australian economy in a league of its own," Mr Swan said.
RBA governor Glenn Stevens indicated after the central bank's April board meeting that Tuesday's inflation numbers would be key to any monetary policy change.
Financial markets are fully priced for a 25 basis points cut in the cash rate to 4.0 per cent, or a 60 per cent risk of a 50 basis point reduction to 3.75 per cent.