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Surging investment in data centres to fuel the AI tech boom and rising household spending on essentials like electricity and rents buoyed economic growth through the three months to September.

National accounts figures showed real GDP expanded by 2.1% in the year, accelerating from 2% in June.

Despite positive signs that the private sector is starting to drive economic activity after a period of strong government support, the quarterly pace of growth was a disappointing 0.4% – well shy of the predicted 0.7% rate.

And after accounting for population growth, there was no rise in real GDP per capita in the quarter, and only a 0.4% increase over the year to September, highlighting the ongoing weak improvements in living standards.

Still, Belinda Allen, CBA’s head of Australian economics, said the national accounts showed how far the economy had come.

“It was just a year ago that (annual) growth was anaemic at just 0.8%,” Allen said.

“Fast forward a year and households are spending again thanks to strong income growth driving better sentiment, businesses are investing, residential construction is taking place and the public sector is placing a floor underneath growth.”

This welcome upswing, however, means the economy may now already be bumping up against its capacity to grow without sending inflation higher – a key risk that will be considered at next Monday’s meeting of the Reserve Bank’s monetary policy board.

Ahead of the release of the GDP figures, the RBA’s governor, Michele Bullock, said it was unclear how much more economic activity could pick up without adding to price pressures.

After inflation jumped to 3.8% in the year to October – well above the 2-3% target range – Bullock at senate estimates said the board would be trying “to determine the extent to which it (the recent increase in inflation) is temporary, or the extent to which it’s giving us a signal that there’s some more permanent pressures in the economy”.

Analysts and investors have largely written off any further rate cuts, and are now foreshadowing the chance the next move will be a hike.

A major positive in the latest national accounts was a boom in business investment, which lifted by 2.9% in the three months and which the ABS attributed to “major data centre investment across NSW and Victoria”.

It was the fastest quarterly growth in private investment in four-and-a-half years, and contributed half a percentage point to overall economic growth in the quarter.

Analysts also noted a lift in productivity growth, although at 0.8% over the year remained relatively weak and a major challenge for the country’s growth prospects.

With homebuilding also contributing in the quarter, Jim Chalmers in a statement highlighted that the economy was now expanding at its fastest annual pace in two years.

“The best way to improve living standards and continue to get more growth into the future is to make our economy more productive and resilient and our budget more sustainable, and that’s our focus,” the treasurer said.

Households in the three months to September were forced to shell out more on power bills, as electricity rebates rolled off, and on other essentials like rent, food, and on health – the last “due to a prolonged and severe flu season,” the ABS said.

While spending on essentials climbed by 1% in the latest quarter, against a 0.6% rise in the previous three-month period, discretionary spending fell 0.2%, after jumping by 1.5% in the quarter before.

A more cautious consumer was also reflected in a rise in households’ savings rate to 6.4% in the September quarter, from 6%.