The inflation rate has come in above expectations, rising to 3.6% in the 12 months to April.
The consumer price index rose a touch from the year-on-year March figure of 3.5%, the Australian Bureau of Statistics said.
Economists expected the monthly price gauge, which can be volatile and is not as comprehensive as the quarterly indicator, to moderate a little to 3.4% in April.
Households have been worn financially thin by the elevated cost of living and the string of interest rate rises aimed at bringing price pressures under control.
The Reserve Bank of Australia remains alert to inflation risks as it works to bring inflation back within its 2-3% target range.
Central bank forecasts have inflation taking until late 2025 to fall within the target range.
The head of prices statistics for the ABS, Michelle Marquardt, said inflation had been relatively stable over the past five months.
“Although this is the second month in a row where annual inflation has had a small increase,” she said on Wednesday.
Charu Chanana, Saxo’s head of foreign exchange strategy, said in a note that Australia’s faster-than-expected April inflation raises concerns about the “final stretch” to bring inflation down.
“This could continue to give reason to the RBA to postpone rate cuts, but is unlikely to bring rate hikes back on the table given the loosening Australian labour market and stretched consumer,” Chanana said.
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IG Australia market analyst Tony Sycamore said the result raised questions about the pace of inflation dropping back towards the target band.
“The runway for the RBA to deliver households an early Christmas gift in the shape of a December rate cut has narrowed,” he said on Wednesday.
The federal treasurer, Jim Chalmers, said “the monthly inflation indicator can be volatile and is less reliable than the quarterly measure because it doesn’t compare the same goods and services month to month”.
“The quarterly measure shows the direction of travel is clear with annual inflation having almost halved since the Albanese Labor government came to office,” he said. “The ABS confirmed very clearly again today that inflation would be higher were it not for our cost-of-living policies.”
The top contributors to the annual increase were housing (4.9%), food and non-alcoholic beverages (3.8%), alcohol and tobacco (6.5%), and transport (4.2%).