The so-called 'trimmed mean' slipped from 0.5 per cent in the June quarter to 0.4 per cent in the September quarter.

The so-called 'weighted median' slipped from 0.4 per cent to 0.3 per cent.

In his first speech as Reserve Bank governor last week, Philip Lowe revealed that each of the bank's two rate cuts this year were in response to lower than expected inflation.

"I am the first governor to have taken office where the concern of the day is more that inflation might turn out to be a bit too low, rather than a bit too high," he told the Citi fund managers conference.

The Reserve Bank board next meets next week on Melbourne Cup Tuesday, and at the end of the week the Bank will publish revised forecasts which could be used to explain a decision to either cut or hold rates steady.

The quarterly headline rate climbed from 0.4 to 0.7 per cent, but mainly because on outsized 19.5 per cent increase in the price of fruit and a 5.9 per cent rise in the price of vegetables, which the Reserve Bank will "look through". Other significant increases were in the price of tobacco (up 5.9 per cent in accordance with scheduled increases in excise) and property rates and charges (up 4 per cent).

The most significant falls in prices were in petrol (down 2.9 per cent in the quarter) and telecommunication equipment and services (down 2.5 per cent).

In a briefing note to clients Capital Economics said the result "gives the RBA an excuse to cut interest rates to 1.25 per cent next Tuesday and we wouldn't rule this out".

"However, we believe its focus on the medium-term nature of the 2 to 3 per cent target and concerns about the housing market will offset the weaker inflation figures and softer labour market data to mean that rates are left at 1.5 per cent."

"But with the stronger dollar set to limit inflation imported from overseas and low wage growth constraining domestic inflation, we still believe that persistently low underlying inflation will result in interest rates falling to 1 per cent next year."