Investing.com-- Australian underlying inflation accelerated more than expected in the third quarter, strengthening the case for another interest rate increase by the Reserve Bank of Australia (RBA) at its meeting next week.
The consumer price index rose 1.3% in the September quarter, matching forecasts but accelerating from 0.6% in the previous quarter, data from the Australian Bureau of Statistics showed on Wednesday. Annual quarterly inflation was 3.9%, matching expectations.
The closely watched trimmed mean measure of core inflation increased 1.0% quarter-on-quarter, in line with forecasts but above the RBA's implied forecast of 0.8%.
Annual trimmed mean inflation accelerated to 3.7%, exceeding expectations of 3.6% and the previous reading of 3.6%.
The figures add to pressure on the RBA, which raised its cash rate by 25 basis points to 4.60% in September amid persistent inflationary pressures and rising oil prices.
"With underlying price pressures gaining traction, it looks increasingly likely that the RBA will put its foot on the brakes sooner rather than later," Capital Economics analysts said in a note.
The Australian dollar's AUD/USD pair rose 0.3% to $0.704 after the data.
The central bank will meet on November 2-3 to decide whether to tighten policy further. Deputy Governor Andrew Hauser said last week that the inflation outlook had deteriorated materially, highlighting the challenge of containing prices without unduly weakening economic growth.
Headline annual inflation also climbed to 4.3% in September from 4.0% in August, driven partly by housing and transport costs, including higher fuel prices.
With underlying inflation remaining well above the RBA's 2%-3% target, the data could reinforce expectations of another rate hike.
"We now think there is a compelling case for another 25bp hike at next week's meeting, whereas we had previously expected the Bank to hold fire," Capital Economics analysts added.
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