Inflation falls below target range, but no ‘smoking gun’ for February rate cut

Borrowers hoping for lower mortgage rates next week could be left disappointed after the latest inflation figures were released today.

However, interest rate cut or not, the lowest petrol prices in six years are giving a welcome boost to families across Sydney.

In the three months to the end of December, inflation increased just 0.2 percent.

For the year it was 1.7 percent lower than the Reserve Bank's target - but maybe not low enough for rates to be cut right now, experts said.

"It doesn't represent a smoking gun for their board meeting next week, so we don't think they'll cut rates next week," ANZ Chief Economist Warren Hogan told 9NEWS.

"We still think that March is probably the right month to pencil in a rate cut."

The fastest rising prices were local holidays and house prices across the country.

Petrol slipped 6.8 percent, while computer and audio visual gear dropped five percent.

Since this inflation number was taken, petrol has dropped a further 6 cents a litre, meaning overall prices in the economy could have actually started to fall.

It is that price deflation which might prompt the Reserve Bank to cut rates again.

But with around one-third of Sydneysiders renting and a third who own their own home outright, many consumers would prefer cheaper petrol to lower interest rates.