The official measure of inflation has fallen for the second month in a row, easing pressure on the Reserve Bank of Australia (RBA) to hike interest rates next week.

On Wednesday morning, the Australian Bureau of Statistics' monthly consumer price index showed annual inflation of 6.8 per cent over the year to February, down from 7.4 per cent in January and a peak of 8.4 per cent in December.

The ABS said the most significant contributors to the annual increase in prices were housing (+9.9 per cent), food and non-alcoholic beverages (+8.0 per cent), transport (+5.6 per cent) and recreation and culture (+6.4 per cent).

However, the level of price increases in most of those categories had eased since the previous month.

For example, the annual increase in the cost of building a new house was at its lowest level since February last year, while travel and accommodation price increases had eased from summer holiday highs.

In mixed news for renters, rents were up an average 4.8 per cent over the past year, but that had not accelerated from the previous month's reading.

Another major cost for households, food, saw much stickier price increases.

"Prices for food and non-alcoholic beverages eased slightly, from an annual rise of 8.2 per cent in January to 8.0 per cent in February," said the ABS head of price statistics Michelle Marquardt.

"Meals out and takeaway food (+7.3 per cent) was the main contributor to the annual increase, followed by food products not elsewhere classified (+11.8 per cent), bread and cereal products (+12.5 per cent), and dairy and related products (+14.3 per cent)," she noted.

Small business struggling to recoup higher costs

It is no surprise that cafes and restaurants have been increasing prices, with eastern Melbourne cafe owner Ray Christie saying his business would be broke within three months if he did not pass on surging costs.

"When I've gone through our invoicing system and bookkeeping records. I'm finding that the average is about 30 per cent, and we've seen products that have risen as much as 300 per cent, he told ABC's The Business program.

"Passing the price rises (to customers) is the last resort. We've changed our menu prices a couple of times in the last few months but we're very reluctant to do that because, you know, you want to keep your regular customers. They'll just end up going somewhere else or, just perhaps, cut back on their spending.

Mr Christie, who has a full-time job in local government, said that has already had an effect on staffing levels, with he and his wife putting in more hours to save on wages costs.

"We've also had to cut back hours worked by our employees," he said.

"So, my wife and I, we're the operators of this business, so we have to spend more time here, so it's more labour-intensive for us.

"I do have a primary job, but I still will end up assisting my wife in the morning, in the afternoons, and on the weekend. So I would still spend 50, 60 to 70 hours a week running this business with my wife."

RBA will 'probably pause'

That is exactly the sort of effect the Reserve Bank has been aiming for, with its string of 10 consecutive rate rises intended to take some demand out of the economy, leading to a moderate rise in unemployment and keeping wages in check.

But there are signs that the effect is somewhat larger and faster than either it or most private sector economists had anticipated, prompting many to now forecast the RBA will take a breather from raising rates when it meets next week.