In annual terms, trimmed mean inflation is forecast to print at 3.7% in the June quarter, compared with the Reserve Bank of Australia's (RBA) expectations of 3.8%, ANZ Research said in a note on Wednesday.

Australia's consumer price index rose 4% on year in May, down from the 4.2% rate posted in April, data from the Australian Bureau of Statistics showed. On a monthly basis, the CPI fell 0.1% in seasonally adjusted terms. Trimmed mean annual inflation was 3.6% in the 12 months to May, up from 3.4% in the 12 months to April.

The lender now expects a trimmed mean forecast quarter-over-quarter rise of 0.9% in the June quarter.

The May inflation data was mixed, with trimmed mean a little stronger than expected but headline inflation softer. There were also increasing signs of second-hand flow-through appearing in the broader inflation basket.

The Australian Bureau of Statistics noted that home builders in most cities raised base prices to pass through fuel surcharges and higher material costs, and the new dwelling costs series is expected to show continued strength over the coming months.

The holiday travel and accommodation group was a little softer than expected, with the group declining 6.9% month-over-month.