Rising food prices and the upward trend of inflation levels are the most pressing concerns that the Reserve Bank of Australia (RBA) must weigh in once it reconvenes on Tuesday to determine the cash rate that will be in effect for February.

Most economists are in agreement that a stay on the current rates will be decided by the RBA board in light of the damages wrought by the flooding disaster earlier this month, which immediately resulted to soaring costs of fruits and vegetables.

Yet more cause of concern, according to the TD Securities-Melbourne Institute, is the gradual spikes seen in inflation, which it said climbed by 0.4 percent in January.

Also, TD Securities reported that inflation jumped by 3.4 percent over the past 12 months and fairly exceeding the three percent threshold set by the RBA as the economy's ideal target band.

TD Securities chief researcher Annette Beachers said that RBA's consideration for the latest inflation figures may prove negligible if the board decides to overlook the obvious, that food prices in Australia are getting more expensive.

Such ploy, however, would only suspend economic risks and most likely, Beachers stressed that the threats would only re-appear and heighten by the later part of 2011.

Beachers also pointed out that there is not much room for the RBA to manoeuvre as she cautioned that Australia is currently looking into "a very tight labour market with a 5 per cent unemployment rate."

Furthermore, TD Securities is expecting that the "massive rebuilding effort going on in Queensland will absorb whatever spare capacity is left in the economy."

Such scenarios leave the TD Securities to assume that "the inflation pressures are more likely to be on the upside to the downside, and we think there'll be a thorough discussion of that at this board meeting."