* CPI +0.4 pct q/q; +1.9 pct y/y, matching f'casts
* Core inflation averaged at +1.75 pct y/y vs +1.9 pct f'casts
* Core measure undershoots RBA target for the 11th straight qtr
* A$ down 0.3 pct at $0.7085 after inflation data
By Swati Pandey
SYDNEY, Oct 31 (Reuters) - Australian consumer prices stayed tepid last quarter while core inflation - a measure closely followed by the central bank - dipped, knocking the local dollar and bolstering views any hike in interest rates is still some way off.
Data from the Australian Bureau of Statistics (ABS) on Wednesday showed the headline consumer price index rose 0.4 percent quarter-on-quarter in the September quarter, in-line with forecasts, and unchanged from the last quarter.
Annual CPI inflation crawled at 1.9 percent, again in-line with forecasts. However, key measures of underlying inflation favoured by the Reserve Bank of Australia (RBA) averaged around 1.75 percent for the year, lagging forecasts of 1.9 percent.
The underwhelming data sent the Aussie AUD=D3 down more than a quarter of a U.S. cent to $0.7085. It hit a one-week top of $0.7122 on Tuesday amid an overnight rally in risk assets.
Core inflation has now undershot the RBA's long-term target band of 2 percent to 3 percent for the 11th quarter on the trot, the longest run of misses on record.
The RBA had already flagged consumer prices will remain depressed toward the end of the year before picking up next year. It, however, does not see the core measure hopping back to the mid-point of its target throughout December 2020.
The RBA will publish fresh forecasts for economic growth and inflation next Friday.
A major headwind for consumer prices has been underwhelming wages growth, which is running near historic lows even as employment has boomed. Stiff competition in the country's retail sector and historically low rental growth have also weighed on inflation.
As a result, the RBA has kept interest rates at an all-time low of 1.5 percent since August 2016.
Interest rate futures 0#YIB: do not fully price in a hike to 1.75 percent until March 2020.