Q2 CPI rises 1.8 qq, 6.1 yy just under forecasts
Core inflation up record 4.9 yy vs RBA target of 23
RBA seen hiking 50bps next week, less chance of 75bps

SYDNEY, July 27 Reuters Australian inflation sped to a 21year high last quarter and is likely to accelerate even further as food and energy costs explode, stoking speculation interest rates will need to more than double to bring the outbreak under control.

Wednesday39;s gloomy report comes just a day before Treasurer Jim Chalmers is due to update the previous government39;s budget forecasts, and he is already warning that inflation would get worse before it got better.

It will be confronting, Chalmers told reporters on the update. Inflation revised up substantially, growth revised down, and all of the implications that brings.

Data from the Australian Bureau of Statistics showed the consumer price index CPI jumped 1.8 in the June quarter, just short of market forecasts of 1.9.

The annual rate picked up to 6.1 from 5.1, the highest since 2001 and more than twice the pace of wage growth.

A closely watched measure of core inflation, the trimmed mean, rose 1.5 in the quarter, lifting the annual pace to the highest since the series began in 2003 at 4.9.

That took core inflation further away from the Reserve Bank of Australia39;s RBA 23 target band and cemented expectations it would hike the 1.35 cash rate by 50 basis points at a policy meeting on Aug. 2.

Markets are leaning against an RBA move of 75 basis…