2018.01.3102:47:00UTC+00Australian Inflation Subdued in Fourth Quarter

Australian consumer prices remained subdued in the previous quarter, with core inflation below the central bank's target, leading investors to widen the likelihood on a hike in interest rates anytime soon.

The Australian Bureau of Statistics reported its consumer price index in the December quarter increased 0.6 percent, which remains unchanged from the pace of inflation in the September quarter.

For the 12 months to the end of December, inflation climbed 1.9 percent from a 1.8 percent rise during the 12 months to the end of September. Key measures of underlying inflation favored by the Reserve Bank of Australia (RBA) averaged around 1.9 percent for the year, dead on expectations.

Core inflation has currently undershot the RBA's long-term target band of 2 percent to 3 percent for eight consecutive quarters, the longest period on record.

A major headwind has been wages growth, which slowed to record lows despite the recent employment boom.

The RBA held interest rates at an all-time low of 1.5 percent since mid-2016, and appears in no hurry for a hike.

Interest rate futures imply around a 50-50 likelihood of a move by August. A hike to 1.75 percent is now not fully priced in until December, compared to November before the data.

The Australian Bureau of Statistics reported the main price increases in the fourth quarter were petrol, which surged over 10 percent, domestic holidays, fruit and tobacco.