Australia’s headline inflation rate is the highest among the world’s largest advanced economies, prompting economists to warn the Reserve Bank may need to deliver further interest rate rises to quash persistent price pressures.

Australia’s consumer price index increased 5.4 per cent in the year to September 30, topping the list of headline inflation rates in the world’s 15 largest advanced economies, according to analysis by AFR Weekend.

The figures highlight the distinctive nature of Australia’s inflation outbreak, which started and peaked months after many other advanced economies, meaning price pressures have persisted well into 2023.

Sean Langcake, head of macroeconomic forecasting for Oxford Economics, said there was no single story explaining Australia’s higher inflation rate. While timing played a role in explaining why inflation was lower in Canada and the US, he said Australia seemed to have stronger underlying price pressures.

‘‘The thing that stands out is just the strength of our core CPI. I think we might be a little bit different on the breadth of inflation,’’ he said.

Australia’s underlying inflation, which strips out volatile price movements, was 5.2 per cent in the 12 months to September 30, exceeded by only Belgium and the United Kingdom.

National Australia Bank senior economist Taylor Nugent said a lot of the cross-country variation in headline inflation had been driven by exposure to the energy price shock resulting from Russia’s invasion of Ukraine.

‘‘Countries like the Netherlands and Spain saw very sharp increases in energy prices, but normalisation in prices is now weighing directly on headline inflation and more broadly easing cost pressures in the economy,’’ he said. ‘‘In Australia, energy prices have not risen as much, but have passed through to CPI more slowly because retail prices adjust infrequently. Government subsidies have pushed some of the measured impact out further into 2024, when subsidies unwind.’’

While core inflation peaked in Australia at a similar level to other countries, Mr Nugent said progress on taming price pressures had been harder to come by. ‘‘Domestic cost pressures are driving still-elevated services inflation. The September quarter data showed the RBA was overly optimistic on how quickly those domestic inflation pressures would recede, and their current forecasts imply only a very gradual easing. The RBA’s upgraded forecasts can readily justify some further tightening in policy.’’

Mr Langcake said population and rent growth may explain some of the relative strength in underlying price pressures. ‘‘Outside Canada, no one’s dealing with the same kind of net inward migration. If you think about housing markets, where supply can’t react [to demand], that’s where you’re getting more of an inflationary impulse.’’

Deutsche Bank chief economist Phil Odonaghoe said the figures demonstrated monetary policy had more work to do in Australia. ‘‘It is worth highlighting that many of the relevant peer economies in [the] sample have policy rates at or above 5 per cent – the US, UK, Canada, for example – while here in Australia, the cash rate is still below 4 1/2 per cent.

‘‘While Australia’s variable rate mortgage market helps explain why some of that gap to policy rates in peer economies might be able to persist, we don’t think variable rate mortgages can justify all of it.’’

Mr Odonaghoe said he expected the RBA would need to deliver one more rate rise, which would take the cash rate to 4.6 per cent.

While markets are almost certain the RBA will leave the cash rate on hold at 4.35 per cent in December, Mr Langcake said he expected the board would raise the cash rate. ‘‘I don’t think there’s any disagreement out there that inflation is coming down in year-on-year terms. The first part of the disinflation is the easy part. Now is where it gets trickier. There’s more upside risks than downside risks, and we could end up with inertia and persistence keeping us away from target for longer.’’