By Stella Qiu
SYDNEY (Reuters) -Australian consumer prices rose at a faster-than-expected pace in October, a new monthly report showed on Wednesday, suggesting a pick-up in inflation that reinforced bets that the current policy easing cycle could well be over.
The Australian dollar edged 0.2% higher to $0.6480, while three-year government bond futures slumped 7 ticks to 96.17. Investors pared bets that the Reserve Bank of Australia could deliver one last rate cut in May next year to 27%, from 40% before.
Data from the Australian Bureau of Statistics showed its monthly consumer price index (CPI) rose 3.8% in October compared with a year earlier, up from 3.6% in September and above median forecasts of 3.6%.
The trimmed mean measure of core inflation ran at an annual 3.3% in October, up from 3.2% in September, also not going in the RBA’s desired direction.
This is the first complete monthly CPI report published by ABS, replacing the old and partial monthly series. However, the RBA has said it still prefers the quarterly prints for a better gauge of inflation trends given the new data can be volatile.
Headline inflation surged in the last quarter to 3.2%, back above the target band of 2-3%, fuelling concerns that monetary policy might not be restrictive after three rate cuts this year. Home loans jumped and the consumer mood turned optimistic for the first time in four years.
Details of the report suggested some elevated price pressures in the services sector, which ran at an annual rate of 3.9% last month, up from 3.5% in September.
Housing inflation picked up to 5.9% in the 12 months to October, up from 5.7% before.
(Reporting by Sam Holmes)
