SYDNEY (Reuters) -Australian consumer prices rose by the most in over two years in the September quarter as electricity and local government charges climbed, data showed on Wednesday, while a shockingly
sharp jump in core inflation seemed to rule out a near-term interest rate cut.
Investors now see just an 8% chance of a rate cut from the Reserve Bank of Australia next week, down from 40% before the data. The Australian dollar gained 0.2% to 66 cents, while three-year government bond futures fell 11 ticks to 96.43, the lowest in two weeks.
The Australian Bureau of Statistics' consumer price index (CPI) rose 1.3% in the third quarter, topping forecasts of a 1.1% increase. Annual CPI inflation jumped to 3.2%, from 2.1%, above the top end of the 2% to 3% target band.
Crucially, the key trimmed mean measure of core inflation increased by 1.0% in the quarter, well above forecasts of a 0.8% gain and unwelcome news for the RBA, which had looked for something nearer 0.6%. The annual pace rose to 3.0%, from 2.7%, the first acceleration since a peak of 6.8% in late 2022.
RBA Governor Michele Bullock said on Monday a 0.9% rise in the core measure would be a "material miss" to the central bank's forecasts.
Details of the report showed the largest price gains in the September quarter came in electricity, which jumped 9%, and local government charges paid by property owners, which surged 6.3%, the fastest pace since 2014.
There was also upward pressure on services costs, with annual services inflation picking up to 3.5% in the quarter, led by residential rental prices and medical services.
(Reporting by Stella Qiu and Wayne Cole; Editing by Himani Sarkar and Jamie Freed)
