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Australian Inflation Levels Decline |
| Source: |
australianetworknews.com |
| Source Date: |
Monday, May 02, 2011 |
| Focus: |
ICT for MDGs
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| Country: |
Australia |
| Created: |
May 10, 2011 |
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A leading Australian index shows the pace of inflation slowed in April, a trend which may prompt the Reserve Bank to leave interest rates on hold when it meets tomorrow.
The TD Securities-Melbourne Institute inflation gauge shows consumer prices rose an average of 0.3 per cent last month, much slower than the steep 0.6 per cent surge recorded in March.
The monthly increase has seen headline inflation for the year to April fall to 3.6 per cent after hitting 3.8 per cent in March.
Underlying inflation, which removes the most volatile price changes and is the RBA's preferred measure, remained well within the Reserve's target range of 2 to 3 per cent at 2.3 per cent for the year.
Analysts say the data suggests that the official Bureau of Statistics March quarter inflation figures - which saw the biggest quarterly consumer price spike in five years - may have been a one-off caused by rising fruit and vegetable prices due to flood damage, and to surging oil prices.
TD Securities head of Asia-Pacific research Annette Beacher says the inflation gauge suggests consumer prices are still in check despite the temporary spike in March.
"Our inflation gauge continues to tell a tale of contrasting inflation trends," she noted in the report.
"Headline inflation is printing uncomfortably close to 4 per cent, while underlying inflation continues to decelerate, and at 2.3 per cent is the lowest annual level since September last year.
"We expect the RBA board tomorrow to again signal that it can comfortably remain on the sidelines for several months to assess the impact of various natural and geopolitical risks buffeting global and local economic activity."
The Reserve Bank has repeatedly said in recent statements on its interest rate policy that it would look past any temporary inflation effects caused by the Queensland floods and Cyclone Yasi and the associated disruption of some fruit and vegetable supplies that triggered massive price increases.
The inflation gauge shows this effect is already easing, revealing a 12 per cent fall in fruit and vegetable prices in April after the previous month's 11.3 per cent rise.
Audio-visual, computing and household supplies also fell in cost.
However, there was a steep seasonal rise in health costs, overseas travel and holiday services and petrol.
Rents also surged 1.2 per cent in April, the highest monthly increase recorded since January 2009, highlighting a trend shown in many recent real estate analyst reports.
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Australian Inflation Levels Decline A leading Australian index shows the pace of inflation slowed in April a trend which may prompt the Reserve Bank to leave interest rates on hold when it meets tomorrow
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