As the Commonwealth Bank yesterday joined the ANZ and the NAB in trimming its home mortgage rates, new figures showed that costs faced by businesses had soared beyond expectations.

The producer price index went up by 5.6pc in the year to September - the biggest rise in the decade since the index was first calculated.

The surprise result prompted economists to lift forecasts for the annual consumer price inflation figure to 5pc.

But they said the release of the inflation figure tomorrow was unlikely to deter the Reserve Bank from delivering more rate relief as the threat of a global recession became clearer.

Commonwealth Securities economist Savanth Sebastian said the central bank believed tomorrow's inflation figures would mark the peak of the cycle, following the collapse of oil prices and the onset of a global slowdown.

Financial markets expect the Reserve Bank to remain focused on the risk of an economic downturn and are pricing in a 92pc probability of a further rate cut of half a percentage point at the next board meeting on November 4.

Such a cut would take standard variable home loan rates below 8pc.

In the meantime, the Commonwealth Bank is set to cut its variable home rate by 0.21 percentage points, after the National Australia Bank cut its rate by 0.20 and ANZ by 0.25. Westpac is yet to announce a cut.

Adding to the case for a further official rate cut is news that China's economic growth rate fell to 9pc in the year to September, its weakest growth figure in five years.

In Parliament, Prime Minister Kevin Rudd said the way that China handled the slump would be important for the world.

He said he was heartened by a statement from the governor of the People's Bank of China, Zhou Xiaochuan, that China would need to boost domestic consumption as its exports fell.

The sharemarket appeared untroubled by yesterday's figures from China, surging by more than 4pc despite a weak lead from Wall Street at the weekend.

The S&P/ASX200 index finished up 171.5 points, or 4.32pc, at 4142.3 on stronger resource and banking stocks.