Australia's core inflation jumps to 7-1/2 year peak in major shock

[SYDNEY] Australian core inflation accelerated to its fastest annual pace since 2014 in the December quarter as fuel and housing costs led broad-based price pressures, a shock that will stoke market speculation of an early hike in interest rates.

Data from the Australian Bureau of Statistics out on Tuesday showed the headline consumer price index (CPI) rose 1.3 per cent in the fourth quarter and 3.5 per cent for the year, above forecasts.

The trimmed mean measure of core inflation favoured by the Reserve Bank of Australia (RBA) jumped to 1.0 per cent in the quarter, above forecasts of 0.7 per cent.

The annual pace picked up to 2.6 per cent, above the 2.3 per cent forecast and atop the middle of the RBA's 2 per cent to 3 per cent target range.

REUTERS