But the consumer price index also cooled from 4.1 per cent in the previous corresponding year, the Australian Bureau of Statistics reported.
On a quarterly basis, inflation rose one per cent, up from 0.6 per cent in the three months to December, the bureau said on Wednesday.
Consensus forecasts had the quarterly rate rising 0.8 per cent in the three months to March for an annual pace of 3.5 per cent.
Bureau head of prices statistics Michelle Marquardt said price rises across education (5.9 per cent), health (2.8 per cent), housing (0.7 per cent), and food and non-alcoholic beverages (0.9 per cent) had contributed to the quarterly increase.
"While prices continued to rise for most goods and services, annual consumer price index inflation was down from 4.1 per cent last quarter and has fallen from the peak of 7.8 per cent in December 2022," she said.
Fast-rising prices have been putting pressure on Australian households and prompted the Reserve Bank to embark on an aggressive interest rate hiking cycle starting in May 2022.
With the economy slowing, and inflation heading in the right direction, the focus has shifted to the prospect of interest rate cuts by the central bank.
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