SYDNEY, May 29 Reuters Australian consumer price inflation unexpectedly picked up to a fivemonth high in April due in part to increases in petrol, health and holiday costs, bolstering expectations that interest rates would not be lowered any time soon.

Data from the Australian Bureau of Statistics on Wednesday showed its monthly consumer price index CPI rose at an annual pace of 3.6 in April, up from 3.5 in March and above market forecasts of 3.4.

Moreover, a closely watched measure of core inflation, the trimmed mean, also accelerated to an annual 4.1, from 4.0. The CPI excluding volatile items and holiday travel stayed at an annual 4.1.

However, market reaction was rather muted. The Australian dollar rose just 0.1 to 0.6657 and the threeyear bond futures fell another 2 ticks to 95.93, having already tumbled earlier in the day thanks to the overnight moves in Treasuries.

Swaps slightly increased the chance of a quarterpoint hike in September to 20 from 12, while doubling down on their bets that any rate cut would not come until August or September next year, some 15 months away.

Economists39; consensus, however, is for the RBA to begin its easing cycle in the fourth quarter.

This was not just one of those statistical flukes caused by a big surge in one or two components due to seasonal distortions or supply interruptions, said Robert Carnell, regional head of research, AsiaPacific, at ING.

Carnell abandoned his call for one rate cut this year after the data….