Higher-than-expected inflation in the September quarter means the Reserve Bank will likely adopt a wait-and-see approach when it meets in November, economists say.
The consumer price index (CPI), the key measure of inflation, rose 1.2 per cent in the September quarter, for an annual rate of 2.2 per cent - stronger than the 0.8 per cent quarterly and 1.8 per cent annual rise forecasted by 11 economists surveyed by AAP.
Underlying inflation, which excludes volatile price movements, was 0.65 per cent in the September quarter and 2.3 per cent over the year to September, still in the lower half of the central bank's target range for annual inflation of two to three per cent over the medium term.
JP Morgan economist Tom Kennedy said the stronger than expected figures were driven by strong price inflation in the housing market as well as the transport sector, thanks to high petrol prices.
He said another cash rate cut still remained likely, although JP Morgan economists had pushed their forecasted cut from November into 2014.
"We still think the RBA has got more work to do in the current easing cycle," Mr Kennedy said.
"I think it's too early to call any rate hikes - a lot of sectors outside mining and the housing market haven't really shown any signs of life, or they've shown very tentative signs of life.
"I think the RBA is going to want a little more momentum in those sectors and for the Australian economy to pick up out of this sub-trend growth environment that we're still in."
But Invast chief market analyst Peter Esho said it was "very difficult" to see the RBA cutting the cash rate any further, unless unemployment rose above six per cent.
"For now we think rates are on hold and probably likely to rise mid next year - there will be few analysts maintaining any forecasts to cuts off the back of these numbers," he said.
CommSec economist Savanth Sebastian said the inflation figures closed the door on any further rate cuts this year.
"Financial markets see just a six per cent chance of a rate cut in November," he said.
Mr Sebastian said that if the recent rise in the Australian dollar, which reached 97.58 US cents on Wednesday, was sustained, the inflation reading for the December quarter would likely be more subdued.
AMP chief economist Shane Oliver said the underlying picture for inflation remained benign.
"The rebound in the Australian dollar over the last two months will dampen inflation in the current quarter, still weak demand and excess capacity is likely to continue to constrain price gains for the next year or so, and the September quarter is normally seasonally strong," Dr Oliver said."As a result headline inflation is likely to fall back to around 0.5/0.6 per cent quarter on quarter in the current (December) quarter."