Cost and price pressures on Australian businesses have lost some of their sting.
Surveying by the National Australia Bank has revealed a weaker set of cost and price movement data for September.
This followed spikes in cost growth over the past few months across both purchasing and labour, interrupting the general downward trend.
Movements in the survey were likely influenced by the large minimum and award wage rises that came into effect in July, helping to push labour cost growth higher.
The measure has since moderated and although higher in comparison to long-run averages, fell to two per cent in September in quarterly equivalent terms.
Purchase price growth also remains high but eased materially, declining to 1.8 per cent.
NAB chief economist Alan Oster said one minor worry in the survey was retail prices growth, which had not budged from 1.8 per cent.
Mr Oster said this could show up in the official consumer price index for the September quarter, which will be pivotal for the Reserve Bank as it looks to bring inflation under control without triggering a major pullback in economic growth.
The bank's economists still expect inflation to pick up in the September quarter to reflect price pressure across energy, rents and a range of services.
"Nonetheless, the September survey results suggest the momentum of some of the key cost pressures driving inflation may have started to step back in a welcome sign for the broader inflation outlook," Mr Oster said.
The bank's central case is for one more interest rate rise in November and then start cutting in August next year, but Mr Oster said there was also the possibility of keeping interest rates at their present level for longer.
ANZ does not expect more interest rate hikes amid further signs of fading cost and price pressures.
"While we still consider the RBA November meeting live, this slowdown in cost pressures adds to the likelihood that the RBA will continue with its extended pause," the bank's economist Adelaide Timbrell wrote in a note.
The survey also captured ongoing resilience in business conditions even though the measure edged lower to 11 index points, to be down three points from August.
The business conditions marker is still sitting above historical average levels, pointing to strength in the sector.
"Broadly, if I look at the survey, I'd say 'well, can we avoid a recession?' This is one definitely to say, 'we probably can'," NAB's Mr Oster said.
Consumers are also feeling a little less glum, with the Westpac and Melbourne Institute index of consumer sentiment lifting 2.9 per cent to 82 in October.
Westpac senior economist Matthew Hassan said optimism was still in short supply and the index remained deeply in pessimistic territory.
"While there are some faint glimmers of hope around family finances and the outlook for jobs, these are being overshadowed by still-high inflation and renewed rate rise concerns," he said.
