Tourists sit on the bollards of the Sydney Opera House.
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Inflation in Australia accelerated in the third quarter, with consumer prices rising 3.2% year-on-year, the fastest pace in more than a year, the Australian Bureau of Statistics said on Wednesday.
The increase was higher than the 2.1% rise in the second quarter and was also higher than the 3% expected by economists polled by Reuters.
The ABS said the most significant price increases were in housing, recreation and culture, and transport.
The trimmed average inflation rate, which excludes extreme price fluctuations in consumer goods and services, rose to 3% from 2.7% in the previous quarter. This is the first increase in the trimmed average inflation rate since December 2022, the bureau said.
With the headline rate at 3.2%, inflation exceeded the Reserve Bank of Australia’s 2-3% target range for the first time since the second quarter of 2024, highlighting the challenges policymakers face in containing persistent price pressures.
Following the data release, Australia’s S&P/ASX 200 While the decline was 0.76%, australian dollar The dollar rose 0.21% to $0.6596.
Josh Gilbert, market analyst at market services firm eToro, said in a note that the latest inflation figures meant expectations for RBA rate cuts were “almost certainly” set back.
He said the RBA’s goal of controlling inflation would take longer than expected, adding that further interest rate easing could be a long way off for investors.
“This confirms that the disinflationary process is stalling, while bringing stagflation concerns into the discussion, especially if unemployment continues to rise,” Gilbert added.
Diana Musina, principal deputy economist at AMP, said the latest figures were too high for the RBA to hesitate in cutting the cash rate next week.
As a result, the RBA is likely to keep the cash rate unchanged at 3.6% at its November and December meetings, it added.
In its September monetary policy statement, the RBA warned that inflation in the quarter “could be higher than expected” due to persistently high house prices and market services prices.
RBA Governor Michelle Bullock said last month that inflation in these regions was “slightly higher than we expected”, but stressed this was not a sign that inflation was “running away”.
In August, the central bank predicted that the cash rate would follow a “gradual easing path” and that underlying inflation would continue to move moderately to around the midpoint of the 2% to 3% range.
Recent headline CPI readings for July and August were 2.8% and 3%, respectively, beating expectations for both months. The inflation rate in September was 3.5%, the highest level since July 2024.
At its last meeting, Australia’s central bank left interest rates unchanged, noting that inflation remained stubborn in some parts of the economy.
The country’s economy exceeded expectations in the second quarter, growing 1.8% year-on-year, the fastest pace of growth since September 2023. That was higher than the 1.6% expected by economists polled by Reuters and the 1.3% expected in the previous quarter.
