The Australian government's pledge to extend energy rebates to the end of the year is likely to put downward pressure on inflation in the second half, ANZ Research said in a Wednesday note.

Pharmaceutical subsidies are expected to have a negligible effect on the consumer price index. Meanwhile, the tax cuts listed in the budget will likely bring a "modest" boost, though the effect is expected around the second half of 2026 if implemented, ANZ Research said.

Official data showed that annual inflation eased to 2.4% in February from 2.5% in January, missing market consensus due to the volatility in electricity prices. Trimmed mean inflation declined to 2.7% from 2.8%.

"The [Reserve Bank of Australia] is likely to look through this slight drop in the headline and may find the monthly trimmed mean result encouraging for disinflation progress but only at the margin," ANZ Research said.