Inflation jump puts November rate cut in doubt

24 Oct 2012, 1:21 pm   -   Source: AAP
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The consumer price index (CPI) rose 1.4 per cent in the September quarter to an annual rate of 2.0 per cent, Australian Bureau of Statistics (ABS) data released on Wednesday shows. (AAP)

The consumer price index (CPI) rose 1.4 per cent in the September quarter to an annual rate of 2.0 per cent, Australian Bureau of Statistics (ABS) data released on Wednesday shows. (AAP)

The biggest quarterly jump in inflation in nearly two years has cast some doubt on an interest rate rise when the RBA board meets in November. 

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The annual rate of inflation has risen to the lower end of the central bank's target band after posting the biggest quarterly jump in nearly two years.

Underlying measures of inflation - which smooth out volatile price swings - also rose at a faster pace than expected, casting some doubt on an interest rate cut on Melbourne Cup Day.

The consumer price index (CPI) rose 1.4 per cent in the September quarter to an annual rate of 2.0 per cent, Australian Bureau of Statistics (ABS) data released on Wednesday shows.

That compares with an annual rate of 1.2 per cent in the year to June.

It was the first official inflation reading since the carbon price was introduced on July 1.

Treasury has estimated the $23 per tonne impost will add 0.7 per cent to the CPI in its first year.

The ABS said the most significant price rises during the quarter were for electricity, which surged by 15.3 per cent, international holiday travel and accommodation (up 6.6 per cent) and medical and hospital services (up 4.5 per cent).

The biggest price falls were for automotive fuel, which declined by 3.9 per cent, and motor vehicles, down 1.0 per cent.

Underlying measures of inflation - the trimmed mean and the weighted median - which the RBA studies more carefully when deciding interest rate policy, rose by an average 0.75 per cent in the September quarter for an annual rate of 2.5 per cent, up from 2.0 per cent previously.

Economists had expected underlying inflation to rise by 0.6 per cent on average in the quarter.

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