Annual inflation jumps to 4 per cent in May

Fresh data will give the RBA more insight into the state of inflation and impact of rate cuts.

The monthly consumer price index rose four per cent over the 12 months to May, above expectations and up from the 3.6 per cent increase in April.

Expectations were for a 3.8 per cent annual lift through to May as compiled by the Australian Bureau of Statistics in its monthly report, marking the third increase in the annual rate in a row.

Economists were predicting another strong outcome in part due to base effects, with this year's inflation figure measured up against the result in May last year, when a large fall was recorded.

Housing, food and non-alcoholic beverages, transport and alcohol and tobacco were the biggest contributors to the annual growth.

ABS head of prices statistics Michelle Marquardt said when excluding volatile items, underlying inflation moderated to four per cent, down from 4.1 per cent in April.

Quarterly inflation data will have an impact on the Reserve Bank's meeting in August. (Bianca De Marchi/AAP PHOTOS)

"Consumer price index inflation is often impacted by items with volatile price changes like automotive fuel, fruit and vegetables, and holiday travel," she said.

The monthly consumer index is not as comprehensive as the quarterly update, which is still considered the principal measure of inflation and the June quarter edition will be keenly anticipated by the Reserve Bank of Australia ahead of its next interest rate meeting.

While the cash rate stayed unchanged at 4.35 per cent again at the June meeting, where it has been since November, the RBA described the economic outlook as highly uncertain.

The central bank's wariness was in part attributed to stronger-than-thought consumption and a minor uptick in inflation.