A private gauge of Australian inflation slowed during July, adding more weight to suggestions the Reserve Bank will keep the official interest rate at 4.5% at tomorrow’s meeting.
The TD Securities-Melbourne Institute revealed today its consumer price inflation gauge rose 0.1% in July, down from June when it rose by just 0.3%. The annual pace of inflation slowed to 2.8%, within the RBA’s 2-3% target band.
The data comes after official figures revealed a slowdown in annual underlying inflation to 2.7%.
"The soft CPI report allows the RBA to remain on hold for several months as mortgage lending rates have already been restored to average levels," Annette Beacher, a senior strategist at TD Securities, said in a statement.
The inflation gauge reveals utilities, health services and alcohol and tobacco prices all rose, but they were offset by declines in food, holiday travel and petrol, which actually dropped by 2%.
Meanwhile, Australian manufacturing activity increased in July with new orders and output both expanding, although employment has declined.
The Australian Industry Group-PriceWaterhouseCoopers performance of manufacturing index rose by 1.5 points to 54.4 during July, above the 50-point level separating expansion from contraction.
Story by Patrick Stafford www.smartcompany.com.au
