Australian consumer prices rose sharply in the third quarter as fuel costs rose again, data from the Australian Bureau of Statistics (ABS) showed on Wednesday, underscoring market wagers for the year's fifth hike in interest rates, Reuters reported.

Source: Reuters via TradingView

The consumer price index rose 1.3 per cent in the September quarter, more than double the previous quarter's 0.6 per cent rise. The monthly series showed prices up 4.3 per cent in the year to September, accelerating from 4.0 per cent in August and above the 4.2 per cent forecast. The quarterly annual rate stood at 3.9 per cent — well above the Reserve Bank of Australia's 2 to 3 per cent target band.

+1.3%Consumer prices in the September quarter, up from +0.6% in the June quarter (ABS)
4.3%Monthly CPI in the year to September, up from 4.0% in August
+1.0%Trimmed-mean core inflation in the quarter — above the RBA's own 0.8% forecast
4.60%The RBA cash rate after four rises this year; the next decision is on November 3

Fuel was the biggest driver. Automotive fuel prices jumped 9.4 per cent in September alone and 23.6 per cent over the year on higher world oil prices, according to the ABS figures reported by Babypips and ActionForex, while electricity costs climbed 12.8 per cent over the year as government power-bill rebates ended. Housing costs rose 5.2 per cent over the year and transport 8.7 per cent, showing the pressure is not confined to petrol.

In a follow-up report, Reuters said the stubbornly hot underlying price pressures all but sealed the case for a fifth interest rate rise next week, as Reserve Bank Governor Michele Bullock appeared before lawmakers. The Australian dollar rose 0.4 per cent to $0.7053 immediately after the data release, MarketFlux reported, as traders moved toward expecting a hike.

For Australia's large Punjabi and Indian community — among the country's biggest migrant groups, with heavy exposure to mortgages, rents and fuel costs — another rise on November 3 would lift repayments again at a time when transport and housing are already the fastest-rising parts of the household budget. The RBA board meets on November 2–3.

What happens next

The Reserve Bank decides on November 3. With core inflation printing above the Bank's own forecast and headline inflation stuck well above target, a fifth rise this year — from 4.60 per cent — is now the market's base case; a hold would need the Bank to argue the fuel-driven spike will fade on its own.