Cup day rate rise looms as inflation nightmare hits
Underlying inflation rose by one per cent in the September quarter, increasing the chance of a Melbourne Cup day interest rate hike.
Core inflation climbed one per cent in Australia in the latest quarter as the head of the Reserve Bank warned that underlying inflation is still too high.
The September quarter increase in the trimmed mean was in line with economist expectations but exceeded the central bank’s forecast for a 0.8 per cent increase.
On an annualised basis, the trimmed mean rose 3.6 per cent.
Headline inflation was hotter than expected by the market, at 1.3 per cent over the quarter.
Markets had upped their bets for a November hike after hawkish remarks in the past week by the RBA’s deputy governor, Andrew Hauser, and chief economist, Sarah Hunter.
At the same time as the data was published by the Australian Bureau of Statistics, RBA governor Michele Bullock was appearing alongside Hauser, Dr Hunter and other top officials at a Senate estimates hearing.
Elevated underlying inflationary pressures were a sign that the labour market was still tight, Bullock said.
“The Monetary Policy Board will meet next week,” she said.
“We’ll discuss our assessment of the flow of data and how the risks are unfolding. A key question is whether the tightening in monetary policy to date will be sufficient to bring inflation back to target in a reasonable time.”
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Monthly headline inflation rose 4.3 per cent on an annual basis, up from four per cent in the 12 months to August.
“Housing was the largest contributor to annual inflation in September, rising by 5.2 per cent,” said Rachael McCririck, ABS head of price statistics.
Transport was the second largest contributor, rising by 8.7 per cent annually, due to higher fuel costs.
-with AAP
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