Australia’s economy slowed unexpectedly in the September quarter as a large drag from inventories offset strength in government and business investment, which still boded well for an increase in capacity that could help cool inflation.

Data from the Australian Bureau of Statistics out on Wednesday showed real gross domestic product (GDP) rose 0.4% in the third quarter, under market forecasts of a 0.7% gain.

Household consumption rose a solid 0.6%, while government spending and business investment made sizable contributions. Inventories, however, took 0.5 percentage points off GDP.

Annual growth still accelerated to 2.1%, the fastest pace since mid-2023. The household savings ratio climbed to 6.4%, from an upwardly revised 6.0%, suggesting consumers still had plenty of spending power.