SYDNEY, April 24 (Reuters) - Australian consumer price inflation slowed less than expected in the first quarter as service cost pressures stayed stubbornly high, a disappointing result for policymakers that almost puts paid to any hope for early interest rate cuts.
The Australian dollar jumped 0.6% to $0.6522, while three year bond futures extended earlier declines to be off 10 ticks to 96.06, the lowest this year.
Futures further scaled back already limited hope that there would be one rate cut at all this year, with just 8 basis points of easing priced in, from 17 bps before.
Data from the Australian Bureau of Statistics on Wednesday showed the consumer price index (CPI) rose 1% in the first quarter, above market forecasts of 0.8%.
The annual pace of CPI inflation, however, slowed to 3.6% from 4.1%, but again came in above forecasts for an easing to 3.5%. For March alone, the CPI rose 3.5% compared to the same month a year earlier, up from 3.4% in February.
A closely watched measure of core inflation, the trimmed mean, rose 1% in the first quarter, above forecasts of 0.8%. The annual pace slowed to 4%, from 4.2%.
The Reserve Bank of Australia has left interest rates at 4.35% for three straight meetings as confidence grew that inflation is on track to ease back to its target band of 2-3% in late 2025.
However, policymakers have been cautious in ruling out any moves on policy as the labour market remains tight. The central bank has raised rates by 425 basis points since May 2022 to tame runaway prices.
The March quarter report showed rental prices rose 7.8% from a year ago, the strongest rise since 2009 while insurance costs jumped 16.4%, the largest increase since 2001. Education also recorded the biggest rise since 2012.
Non-tradeable goods, influenced mostly by domestic demand, remained high at 5.0%, while tradeables rose just 0.9% from a year ago.
(Reporting by Stella Qiu; Editing by Jacqueline Wong and Sam Holmes)
