Capital expenditure rose 0.4 per cent in the December quarter and 7.8 per cent on the same period in 2024, according to data released by the Australian Bureau of Statistics on Thursday.
The quarterly increase was driven by spending on renewable energy projects and buildings.
But the growth was tempered by a decline in equipment and machinery spending after a record-high investment in data centres during the previous quarter.
"Business investment in battery-energy storage systems featured strongly this quarter," the bureau's head of business statistics Tom Lay said.
"Spend on wind and solar developments also remained at an elevated level.
"Strength was also seen from data centre construction, despite the fall in equipment and machinery."
Capital expenditure went up 2.3 per cent in the quarter for buildings and structures, while it was up by 3.7 per cent in non-mining industries.
The building growth was driven by a large spend on electricity, gas and water projects, as well as in the real estate and media and telecommunications industries.
The amount spent on new equipment fell 1.7 per cent.
"The drop in new equipment and machinery was driven by an easing in data centre spend this quarter, although equipment investment in the information media and telecommunications industry remains at an elevated level, up 49.6 per cent from last year," Mr Lay said.
It comes as Treasurer Jim Chalmers said the May federal budget would focus heavily on dealing with inflation.
Underlying inflation rose to 3.4 per cent in January, giving the Reserve Bank more reason to lift interest rates, data released on Wednesday revealed.
While headline inflation remained steady at 3.8 per cent to start the year, the central bank looks more closely at the underlying figure when it sets rates.
"The budget will be an ambitious budget and it will recognise the pressures on people," Dr Chalmers told ABC Radio on Thursday.
"All of this is about responsible economic management. People can expect to see more of that in May, and as part of that, there will be more savings."
While the Reserve Bank is expected to keep rates on hold after hiking them to 3.85 per cent in February, the inflation figures reinforce a further rise is on the cards.
"We have made a lot of progress together as a country since the peak of inflation in 2022, but it's higher than we'd like for longer than we'd like, and that means there's more work to be done," Dr Chalmers said.
Opposition Leader Angus Taylor said government spending was to blame for inflation.
"(The treasurer) keeps putting band aids on bullet wounds, and this is what happens if you don't solve the underlying problem," he told Sky News.
"This government has completely failed to beat inflation. Inflation has beaten it."
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