The monthly consumer price index fell to 6.9 per cent in October after hitting 7.3 per cent the month before.

Recently introduced by the Australian Bureau of Statistics to supplement the main quarterly index, the monthly measure of price pressures remains high and well above the 2-3 per cent inflation range targeted by the central bank.

However, the ABS said about half of the decline was due to an annual reweighting in the basket of goods and services measured for the consumer price index.

ABS head of prices statistics Michelle Marquardt said the update in October led to several changes, most significantly in international travel. It increased from 0.1 per cent of the CPI basket to 1.9 per cent

Surging new dwelling costs contributed to the inflated annual score, lifting by 20.4 per cent over the year.

“High levels of building construction activity and ongoing shortages of labour and materials contributed to the rise in new dwellings,” Ms Marquardt said.

The cut to the fuel excise tax also showed up in the October reading, with automotive fuel prices increasing by 11.8 per cent.

While fruit and vegetable costs remain high, better growing conditions fed into lower prices in October (up 9.4 per cent) compared to September (17.4 per cent).

Holiday travel and accommodation prices also moderated, as did airfare prices as school holidays ended and the off-peak season for European and American travel began.

-with AAP