SYDNEY: A private gauge of Australian price pressures showed consumer price inflation at its lowest in seven months in August, a welcome sign of moderation after higher readings in the second quarter.
The TD Securities-Melbourne Institute's monthly measure of consumer prices was unchanged in August, following a 0.2 percent rise in July. As a result the annual pace of inflation slowed to 2.5 percent, compared to 2.6 percent in July and a top of 3.0 percent in June.
That was the weakest rate since January and right in the middle of the Reserve Bank of Australia's (RBA) long term target band of 2-3 percent.
The RBA holds its September 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.
"The signal from our gauge is that inflation pressures have moderated in the quarter," said Annette Beacher, TD's head of Asia-Pacific research.
"The RBA continues to express uncertainty about Australia's economic health once the mining boom ends, hence for tomorrow's board meeting we expect more of the same "stability in interest rates"."
The gauge suggested the official measure of consumer prices (CPI) might rise by only 0.2 percent for the entire third quarter. Such a soft outcome would pull the annual pace down to 2.5 percent, from 3.0 percent in the second quarter.
Monday's survey showed price rises for fruit and vegetables, furniture and furnishings, and newspapers, books and stationery.
These were offset by falls in health, petrol, and holiday travel and accommodation.
Various measures of underlying inflation were also muted. The trimmed mean dipped 0.1 percent in August to be up 2.7 percent for the year. Inflation excluding fuel, fruit and vegetables was flat in the month, and ran at 2.1 percent for the year.
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.
Prices for tradable goods and services fell by 0.2 percent for a second straight month in August, likely due to the strength of the local dollar. That saw annual inflation slow to 1.9 percent, from 2.3 percent.
Prices in the non-tradables sector, where inflation has been stubbornly high, rose 0.1 percent in August and 3.0 percent on the year.
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