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Inflation stays low in September
Inflation stays low in September

Inflation in September stayed low, giving the Reserve Bank of Australia scope to cut its interst rate again - although they are not likely to do so tomorrow, a survey says.

The TD Securities-Melbourne Institute Monthly Inflation Gauge rose 0.2 per cent in September, after a rise of 0.6 per cent in August.

The gauge said inflation grew 2.4 per cent in the year to September.

Price rises in fruit and vegetables, travel and automotive fuel were the main contributors to the September result, offset by falls in rents, footwear and audio visual and computing equipment and services.

Underlying inflation, which excludes volatile monthly price movements, remained flat in September, with an annual rise of 2.4 per cent - within the RBA's target range of 2 to 3 per cent.

TD Securities head of Asia-Pacific Research Annette Beacher said headline and underlying inflation should remain subdued in the September quarter.

"We forecast headline inflation to increase by 0.8 per cent, to be 1.4 per cent higher than a year ago," she said.

"Underlying inflation should increase by 0.5 per cent in the quarter, lifting the annual rate slightly from 2.0 per cent to 2.1 per cent."

Ms Beacher said there seemed to be little impact from the carbon tax evident in price rises.

She added that she did not expect the RBA to cut the cash rate at its monthly board meeting tomorrow.

"We believe waiting for another monthly data suite is prudent," she said.

Ms Beacher said this would include the Australian September quarter consumer price index, to be released on October 24, and economic growth data from China.

The RBA would be likely to cut by 0.25 per cent in November, although it could go for a bigger cut of 0.5 per cent, Ms Beacher said.