The consumer price index jumped 5 percent from a year earlier, the Bureau of Statistics said in Sydney today. Prices rose 1.2 percent from the second quarter, when they gained 1.5 percent. The median estimate in a Bloomberg survey of 16 economists was 4.8 percent and 1 percent respectively.
The surge in prices may limit the size of the central bank's potential interest-rate reductions in coming months. Governor Glenn Stevens cut the benchmark rate by 1 percentage point this month to 6 percent, the biggest reduction since a recession in 1992, to cushion the economy against a global credit squeeze that has roiled financial markets.
Housing costs climbed 2.6 percent in the third quarter, financial services gained 1.7 percent and food and alcohol increased 1.4 percent, today's report showed. Clothing fell 0.7 percent.
While inflation is ``likely to remain high in the period immediately ahead,'' there are increasing signs the economy's 17-year expansion is slowing enough to contain future price gains, Stevens said yesterday.
Central bank policy makers aim to keep annual price gains between 2 percent and 3 percent on average, and seek ``to respond to the medium-term outlook for prices, not just the current data,'' Stevens said yesterday
The annual 5 percent jump in consumer prices in the third quarter was the biggest rise since the second quarter of 2001, when prices jumped after the introduction of a tax on goods and services. Excluding that period, today's surge was the biggest since 1995.
Stevens expects inflation will slow in 2009 as Australia's economy cools as consumers cut spending and banks reduced lending to home-buyers and businesses.
Gross domestic product grew 0.3 percent in the second quarter, the slowest pace in more than three years, as consumer spending contracted for the first time since 1993.
The jobless rate rose to 4.3 percent last month from 4.1 percent in August. Lending by banks to home buyers gained 0.4 percent in August, the smallest monthly increase in 22 years, and residential building approvals fell for a second month.
The nation's jobless rate will more than double to 9 percent in late 2010 as slower economic growth in China, the nation's largest trading partner, prompts companies to fire workers and cut investment, JPMorgan Chase & Co. Chief Economist Stephen Walters said in Sydney today.
Today's report includes the Reserve Bank's core inflation measures, which exclude the largest price gains and declines. The weighted-median gauge of inflation rose 1.3 percent in the quarter for an annual increase of 4.8 percent.