Australia Inflation Slows In May: Survey
2011-06-06 14:43:43
Inflation in Australia eased in May as a fall in travel costs offset an increase in fruit and vegetable prices, a survey by the TD Securities and the Melbourne Institute showed Monday.
The TD- MI monthly inflation gauge rose 0.2 percent in May, following a 0.3 per cent rise in April. In the twelve months to May, the inflation gauge rose 3.3 percent, after a 3.6 per cent rise for the twelve months to April.
The inflation gauge foreshadowed the surge in annual consumer price inflation growth in the March quarter to 3.3 per cent from 2.7 per cent, said Annette Beacher, Head of Asia-Pacific Research at TD Securities.
Contributing most to the overall change in May were price rises for fruit and vegetables, rents, and books, newspapers and magazines. These were offset by falls in holiday travel and accommodation, alcohol and tobacco, and household appliances, utensils and tools, the report said.
According to Beacher, inflation pressures are set to accelerate into 2012 with the terms of trade continuing to rise and ongoing lack of spare capacity in the labor market.
The trimmed mean of the inflation gauge remained unchanged in May, following a 0.2 per cent rise in April. In the twelve months to May, the trimmed mean rose 2.4 per cent.
"For the Reserve Bank Board meeting tomorrow, we expect the bank to signal that it can comfortably remain on the sidelines for several months, Beacher said, adding "we did not subscribe to the 'June is live' rhetoric that emerged early in May, as many members of the RBA Board remain clearly concerned about the two-speed economy."
The RBA had indicated that it may raise the key interest rate, now held at 4.75 percent, in the near-term. The central bank repeated its warning in the minutes of the May 3 monetary policy meeting released last month.
RBA expects the pace of headline inflation to slow by early next year following the unwinding of the spike in fruit and vegetable prices. The bank forecasts core inflation to be at around 3 percent in 2011 and 2012, while the headline rate is expected to reach 3.25 percent in the year ending December 2011.