Household spending propelled Australia's economy in the third quarter and pushed year-on-year growth to its highest level in three years at 4.3 percent, economists said Wednesday.
The nation's gross domestic product (GDP) grew at 1.0 percent quarter-on-quarter, up from 0.7 percent in the previous three months, according to national accounts data released by the Australian Bureau of Statistics. The data for the period to September followed a warning from the central bank that it remained concerned about inflationary pressures despite leaving its target cash rate at 6.75 percent after raising it a quarter percentage point last month.
The Reserve Bank of Australia (RBA) said it expected continuing strong domestic demand to put inflation above 3.0 percent, the top of its target band, in the first half of 2008 but to "decline somewhat thereafter".
Economists suggested another interest rate rise was likely after the central bank's first policy meeting of 2008 on February 5. "We expect the Reserve Bank will lift interest rates by another 25 basis points in February," said Australia & New Zealand Banking Corp head of Australian economics Tony Pearson.
"There are also good prospects the RBA will need to increase rates again by another 25 basis points in May." The official data released Wednesday showed household consumption rose a brisk 1.2 percent quarter-on-quarter and 4.5 percent over the year to the end of September.
"There has been a significant shift over the past three months, with Aussie consumers taking the reins of the local economy," said Martin Arnold, an equities economist at CommSec. In the second quarter, a surge in business investment drove GDP growth.