SYDNEY, Sept 25 Reuters Australian consumer price inflation slowed to a threeyear low in August thanks to government rebates on electricity, while core inflation hit its lowest since early 2022 in welcome progress that could open the door to rate cuts.

Market reaction was restrained because the central bank already said it would look through the decline in headline inflation, which is temporary and not enough to justify rate cuts in the nearterm.

The Australian dollar still came off its 112year high and was last flat at 0.6891, while threeyear bond futures were little changed at 96.63.

Swaps imply a 75 chance that the Reserve Bank of Australia can start lowering rates in December after it held policy steady and did not discuss the option to hike on Tuesday.

Data from the Australian Bureau of Statistics on Wednesday showed its monthly consumer price index CPI rose at an annual pace of 2.7 in August, down from 3.5 in July and in line with market forecasts.

That is thanks to electricity subsidies from the federal and state governments, which lowered prices by almost 15 in August, noted the ABS. Otherwise, they would have risen 0.1.

Petrol prices also dropped 3.1 in the month.

Encouragingly, when volatile items and holiday travel were excluded, the CPI fell to 3, the top of the target band of 23, from July39;s 3.7.

A closely watched measure of core inflation, the trimmed mean, also slowed to an annual 3.4, from 3.8 in July. The RBA expects it to be at 3.5 by the end…