Australia's headline consumer price index (CPI), the data that the central bank uses to gauge the underlying trend in inflation, lifted 0.7 per cent in the September quarter, for an annual rate of 2.8 per cent, the Australian Bureau of Statistics (ABS) said today. In the June quarter, the CPI increased 0.6 per cent for an annual rate of 3.1 per cent.

Short of economists' estimates of a 0.8 per cent CPI increase, the latest figure decreases the chances that the Reserve Bank of Australia, which aims to keep underlying inflation between 2 and 3 per cent over the economy cycle, will raise official cash rates next week.

The Australian dollar fell half a US cent after the release of the inflation data. At 11.31am (AEDT), the local unit was trading at 98.01 US cents.

The most significant price rises this quarter were for tobacco (+7.0 per cent), water and sewerage (+12.8 per cent), electricity (+6.0 per cent), property rates and charges (+6.2 per cent) and rents (+1.1 per cent).

Meanwhile, the most significant offsetting price falls were in automotive fuel (-3.7 per cent), vegetables (-5.4 per cent), pharmaceuticals (-3.9 per cent), audio, visual and computing equipment (-2.7 per cent) and soft drinks, waters and juices (-1.8 per cent).