The Reserve Bank is under more pressure to cut interest rates after inflation fell further below its target band.

Key points: Core inflation of 1.4pc is the lowest on record

Core inflation of 1.4pc is the lowest on record The RBA acknowledged continued low inflation is a key condition to cutting interest rates

The RBA acknowledged continued low inflation is a key condition to cutting interest rates Headline inflation, including fresh food and fuel, fell to zero over the first quarter

Core inflation —an average of the trimmed mean and weighted median measures and regarded as the RBA's preferred inflation measure — came in at 1.4 per cent over the year, the weakest reading since the series started in 2003.

It has now been stuck below the RBA's 2-3 per cent target band for three years.

Headline inflation — which includes volatile items such as fresh food and fuel — was flat over the quarter, and dropped from the 1.8 per cent recorded over 2018 to 1.3 per cent at the end of March.

A fall in fuel prices (-8.7 per cent) and travel costs balanced out significant hikes in vegetable prices (+5.8 per cent) caused by the unhappy confluence of both drought and floods in the first three months of year.

The cost of secondary education (+4.2 per cent) and motor vehicles (+2.4 per cent) also hit households' pockets.

The overall weakness in headline inflation can be sheeted home to items that have a relatively large weight in the CPI basket, such as clothing, new dwelling purchases, travel and accommodation, and electricity.

May rate cut better than 50-50 chance

The weaker than expected data sent the Australian dollar tumbling almost 1 per cent.

At 1:38pm (AEST), the dollar was buying 70.34 US cents as traders' expectations of an interest rate cut in coming months increased.

The $A fell immediately on the news of the weak inflation figures as markets bet the RBA will be forced to cut rates. ( ABC News/Thomson Reuters Eikon )

NAB's economics team said the softer than expected result raises the possibility of a rate cut at the RBA's May meeting in two weeks.

"Today's data, in our view, seems to meet part one [inflation] of the [RBA] board's criteria and perhaps more, given core inflation has actually moved the wrong way," NAB said.

"Alongside an environment of weak growth, a downward revision to GDP forecasts and following three years of below-target inflation readings, these data increase the risk of a RBA cut in May."

Indeed, money markets are now pricing in a better-than-50 per cent chance of an RBA rate cut next month.

The inflation data follows a slight uptick in unemployment.

A continued rise in monthly jobless figures would meet the RBA's other condition for a rate cut.

Indeed economist Callam Pickering said the RBA may as well cut rates now.

"We have credible inflation figures going back almost five decades," Mr Pickering said.