SYDNEY: Australian consumer prices rose in August at the fastest annual pace in a year, but a key measure of core inflation eased, keeping the door open to a further cut in interest rates.
The Australian dollar inched up 0.2% to $0.6611 while three-year government bond futures slipped 3 ticks to 96.51.
Investors maintained bets for the Reserve Bank of Australia to keep interest rates steady at 3.6% this month, while paring back the chance of a November easing to 60%, from about 70% before the data.
Data on Wednesday from the Australian Bureau of Statistics showed the monthly consumer price index (CPI) rose 3.0% in August from a year earlier and up from 2.8% in July, mostly due to base effects. It came in just above median forecasts of 2.9%.
For the month, CPI was flat as electricity prices fell 6.3% on new government rebates and holiday travel and accommodation dropped 3.5%.
The key trimmed mean measure of core inflation ran at an annual 2.6% in August, down from 2.7% in July. A measure excluding volatile items and holiday travel climbed to 3.4% from 3.2%.
The RBA has downplayed the importance of the monthly CPI data, saying the series remained too volatile, with interest rates only cut this year in February, May and August after assessing the quarterly inflation figures.
On Monday, Governor Michele Bullock said Australia's economy was in a good place, with inflation expected to return to the mid-point of the target band of 2% to 3%, and the labour market nearing full employment.
The central bank had forecast headline inflation, which ran at 2.1% last quarter, to pick up to 3.1% by the middle of next year, as electricity rebates fade, but core inflation is expected to stay anchored around 2.6% over the coming years.
All up, that suggested little urgency to cut rates for the central bank at the policy meeting from September 29 to 30, since the labour market has stayed resilient, with unemployment at a historically low rate of 4.2%. - Reuters
