SYDNEY: Australian consumer prices rose sharply in the third quarter as fuel costs rose again, while core inflation stayed uncomfortably hot and underscored market wagers for the year’s fifth hike in interest rates.
Coupled with hawkish comments from its central bank chief, the inflation data led markets to imply an 85 percent probability that the Reserve Bank of Australia will lift the current 4.6 percent cash rate by a quarter point next Tuesday, up from 69 percent before. The Australian dollar rose 0.3 percent to USD0.7043 and 3-year government bond futures slid 7 ticks to 95.08.
Wednesday’s data from the Australian Bureau of Statistics showed its consumer price index (CPI) rose 1.3 percent in the third quarter, after an increase of 0.6 percent the previous quarter.
Annual CPI inflation ran at 3.9 percent. The key trimmed mean measure of core inflation rose by 1.0 percent in the quarter, matching forecasts and keeping the annual pace at a lofty 3.6 percent, well above the Reserve Bank of Australia’s target range of 2percent to 3 percent.