SYDNEY (Reuters) - A private gauge of Australian inflation showed price pressures subsided in July, a welcome development for policy makers after official figures surprised on the high side in the second quarter.
The TD Securities-Melbourne Institute’s monthly measure of consumer prices edged up 0.2 percent in July, following a flat outcome in June. That was a subdued result given July usually sees seasonal increases in many government charges, from rates to utilities.
As a result the annual pace of inflation slowed to 2.6 percent, from 3.0 percent in June, taking it back toward the middle of the Reserve Bank of Australia’s (RBA) long term target band of 2-3 percent.
The RBA holds its July policy meeting on Tuesday and is considered certain to leave interest rates at 2.5 percent, where they have been since it last cut in August 2013.
“Ongoing caution from RBA in recent weeks speak to us that the Board can pause for another month and assess the improving global economic outlook as well as more mixed data news closer to home,” said Annette Beacher, TD’s head of Asia-Pacific research.
Monday’s survey showed seasonal price rises for electricity, gas and other household fuels, property rates and charges. These were partly offset by falls in water and sewerage, clothing and footwear, and alcohol and tobacco.
Various measures of underlying inflation also moderated in July. Annual growth in the trimmed mean fell back to 2.6 percent, from 3.0 percent, while inflation excluding fuel, fruit and vegetables slowed sharply to 1.9 percent.
Prices for tradable goods and services fell by 0.2 percent in the month to drag the annual pace down to 2.3 percent. Even the non-tradables sector, where inflation has been stubbornly high, saw some improvement with prices up 2.8 percent for the year compared with 3.3 percent in June.
The slowdown suggested that a high reading recorded for the RBA’s trimmed mean measure of inflation in the second quarter might have been an aberration and not the start of a trend.
Reporting by Wayne Cole; Editing by Shri Navaratnam