According to data published by the Australian Bureau of Statistics (ABS) on Wednesday, the Consumer Price Index (CPI) rose by 7 percent in the 12 months to March - down from 7.8 percent in the year to December.
Prices rose by an average of 1.4 percent in the first three months of 2023 - the smallest quarterly rise since the end of 2021.
The price of most goods and services rose but Michelle Marquardt, head of price statistics at the ABS, said increases were smaller than in recent quarters.
However, there were steep price jumps for medical services, tertiary education and household fuels between December and March, driving the CPI increase.
Domestic holiday costs also increased by 4.7 percent and fruit and vegetable prices by 2.4 percent.
Responding to the data, Treasurer Jim Chalmers said Australia had passed the peak of the inflation crisis but that cost-of-living pressures would hang around.
Annual inflation for goods was 7.6 percent in March compared to the 9.5 percent recorded in December, largely attributed to price falls for furniture, appliances and clothing.
Annual inflation for services was 6.1 percent in March - the highest figure since 2001.
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