Inflation in Australia accelerated to the top of the central bank's comfort zone in September, a private survey suggested on Friday, keeping the door open for yet another rise in interest rates.
The TD Securities-Melbourne Institute monthly inflation gauge rose 0.2% in September, following sizable increases of 0.5% in August and 0.6% in July.
Annual inflation picked up to 3.0%, the top of the Reserve Bank of Australia's (RBA) 2% to 3% target band.
Based on the survey, it was possible headline consumer inflation could rise 1.3% in the third quarter, even more than the second quarter's 1.2% jump, said University of Melbourne economist Don Harding.
Such a large increase could unsettle the RBA, which had already raised interest rates to a decade high of 6.5 percent in August to restrain price pressures.
"With the official CPI forecast to be uncomfortably high, the RBA Board will have compelling reasons to increase the cash rate at its November meeting," said Joshua Williamson, a senior economist at TD.
"Indeed, it is not clear that just one more interest rate rise is enough to control inflationary pressure," he said.
The central bank holds its October policy meeting next Tuesday. Investors are pricing in little chance of a hike right now given the squeeze in global credit markets and the deteriorating outlook for the U.S. economy.
But the market is pricing in some chance of a tightening at the RBA's November meeting, given the risk of a high consumer price index, due out on October 24.
The trimmed mean of the TD-MI gauge, a statistical measure of underlying inflation, increased 0.1% in September, following a 0.3% rise in August. Growth for the year slowed to 2.9%, from 3.1% in August.
Core inflation excluding volatile fuel, fruit and vegetable prices, rose 0.3% in September. The annual rate eased slightly to 3.4% from 3.8%.
Contributing most to the overall increase in the September figure were rises in the prices of holiday travel and accommodation, meat and seafood, sport and other recreational activities, and household furniture and appliances.
The rises were partially offset by falls in the prices of fruit and vegetables, and audio, visual and computing equipment. The biggest change was in the price of fruit and vegetables which fell 3.7%, while the price of fuel rose slightly.