Headline inflation was 1.2 per cent in the September quarter, up from 0.8 per cent in June, data released by the Australian Bureau of Statistics on Wednesday showed, as the cost of petrol, rents and electricity surged.

However, annual headline inflation fell to 5.4 per cent in September, down from 6 per cent in June.

The data was stronger than economists’ expectations of a lift in the quarterly consumer price index of 1.1 per cent and an annual increase of 5.3 per cent.

The fresh figures are likely to be concerning news for Ms Bullock and will raise expectations that the central bank hikes the cash rate to 4.35 per cent, up from 4.1 per cent, at its next board meeting on Melbourne Cup Day, November 7.

Speaking at a business conference in Sydney on Tuesday evening, Ms Bullock reiterated that the RBA would hike rates if inflation proved more persistent than anticipated.

“The board will not hesitate to raise the cash rate further if there is a material upward revision to the outlook for inflation,” she said.

“Accepting this would risk eroding public credibility in our commitment to low and stable inflation.”

In a concerning sign for the RBA, its preferred measure of underlying price pressures, trimmed mean inflation, rose to 1.2 per cent from 0.9 per cent in June – well above the RBA’s forecast of no change from June.

The benchmark S&P/ASX200, which had been trading about 0.4 per cent higher since trading opened has now slipped 0.3 per cent lower to 6839.9 points.

Underpinning the surprise result was a 7.2 per cent increase in fuel prices in the September quarter – the highest quarterly rise since March 2022.

With Brent crude prices nearing $US88 a barrel following the outbreak of war between Israel and Hamas, motorists have been paying upwards of $2 a litre for petrol.

A potential escalation of the conflict, to embroil Iran or the United States, risks sending oil prices even higher, adding further volatility to global oil markets.

More to come.