Inflation is expected to have eased slightly in the September quarter, but next week’s publication of the consumer price index (CPI) still leaves scope for the central bank to raise interest rates by as much as half a percentage point, economists say.

The September quarter CPI, due on Wednesday, is expected to take centre stage ahead at the Reserve Bank of Australia’s (RBA) November 3 board meeting – Melbourne Cup day.

ICAP senior economist Adam Carr says an elevated reading or upside surprise raises the prospect of a more aggressive 50 basis point move.

The market has already fully priced a 25 basis point rise in the cash rate, which now sits at 3.25 per cent after the RBA raised the rate from 3 per cent earlier this month.

“If we get a strong number, there is no question I think the market will price in 50 basis points and you will see a handful of analysts fall in line with that as well,” Mr Carr said.

The CPI, which is the key measure of inflation, is expected to have risen by 0.9 per cent in the September quarter for an annual pace of 1.2 per cent, according to an AAP survey of 14 economists.

Rents, petrol prices and housing were expected to be the main reasons behind the September quarter rise.

Food prices were likely to have been flat, with the cost of fruit and vegetables easing in the quarter.

The CPI rose 0.5 per cent in the June quarter, and was up 1.5 per cent from the a year ago.

The RBA said in the minutes of its October board meeting that inflation was expected to decline in the near term, but less than previously forecast.

“Keeping interest rates at very low levels for an extended period could therefore threaten the achievement of the inflation target over the medium term,” the minutes said.

Later in the minutes, the RBA said that by 2011 “inflation could be rising again”.

In terms of monetary policy, the RBA’s focus is the underlying measures of inflation – the weighted median and trimmed mean – which exclude volatile prices from CPI calculations.

Economists expect the average of the two measures to rise 0.7 per cent in the September quarter for an annual pace of 3.45 per cent.

Underlying CPI rose 0.8 per cent in the June quarter, and by 3.9 per cent in the year to the June quarter.

Mr Carr believes an underlying figure above 0.8 per cent “or in the ones” will lock in a 25 basis point move and heighten discussion that the RBA would lift the cash rate by 50 basis points.

The RBA wants inflation to return to its target band of between two and three per cent over the course of the economic cycle.

St George Bank chief economist Besa Deda said she expected headline CPI to come in at 1.1 per cent in the September quarter and underlying CPI at one per cent.

Ms Deda said that with the RBA forecasting inflation to rise by 2011, the central bank would tighten interest rates in a bid to control pressures on prices.

“It really supports the notion that more rate rises are on the way and next week’s outcome might determine at the edge how aggressive they might be in taking rates in November,” Ms Deda says.

Nomura Australia chief economist Stephen Roberts is tipping more moderate price rise at 0.5 per cent headline and 0.65 per cent underlying CPI.

Mr Roberts said this left open the possibility that the RBA would be able to pause in December after a 25 basis point rise in November.

“There’s a wide range of items which will have zero or a small negative price change, particularly in the manufactured goods area,” Mr Roberts said.