The Reserve Bank of Australia is satisfied that inflation in on track and will be consistent with its two to three per cent target over the coming few years.

But it is puzzled by the pickup in the latest round of figures.

The official inflation rate rose to 2.7 per cent over the year to the December quarter, from 2.2 per cent three months earlier.

Measures of underlying inflation picked up as well, from just below to just above the mid-point of the target band.

The RBA said in its quarterly Statement on Monetary Policy released on Friday that there are several possible explanations for the acceleration.

It could be that the falling exchange rate has flowed through into consumer prices, via higher import prices, more rapidly than normal.

Or slower growth of wages, thanks to the weak labour market, is taking longer than usual to flow through into the prices of non-tradeable goods and services.

Or perhaps business margins between input costs and selling prices have widened, possibly consistent with improved trading conditions suggested by business surveys.

Or perhaps there’s less spare capacity in the economy than thought, meaning even sluggish growth could put a higher floor under prices.

Or maybe it was just “random noise in the data”.

“It is not possible to distinguish clearly between the different explanations because of the inability to directly observe pass-through, margins, costs or noise,” the RBA said.

It may even be some combination of some or all of those factors.

Either way, the RBA expects inflation to be well behaved.

It clearly does not plan to cut interest rates in the near future, as it flagged on Tuesday after its February board meeting.

But if the RBA does see the need to cut, it’s unlikely that the outlook for inflation will stand in its way, whatever ever the reason for the December quarter blip.