Bank of America (BofA) expects that Australia's headline consumer price index (CPI) rose 0.4% month-on-month and 3.9% year-on-year in February, while trimmed mean inflation rose 0.3% month-on-month and 3.3% year-on-year, according to a Monday note by the bank.

BofA said rents rose 0.3% month-on-month and new dwelling costs gained 0.4%, while auto fuel is expected to weigh on February CPI before surging in March, the note added.

Upside inflation risks from the energy spike, coupled with a tight labor market, might see the Reserve Bank of Australia hike rates in May, the bank added.