Inflation pressures ease as water charges plunge in Victoria

By Simon Frazer

The Reserve Bank is expected to keep the rate on hold again in August at a record low of 2. 5 per cent - none of the 32 economists surveyed by Bloomberg expect any move at tomorrow’s board meeting.

That is close to the middle of the Reserve Bank‘s inflation target band, relieving some pressure from the last official data which was at the top of that range.

The TD Securities - Melbourne Institute Inflation Gauge rose by 0. 2 per cent in July, taking its annual rate to 2. 6 per cent.

TD Securities economist Annette Beacher says she is cautious about such an unseasonally soft reading, but says it will again deter the RBA from moving the official interest rate up.

A closely-watched inflation measure suggests price rises last month were surprisingly weak.

Ms Beacher says the surprisingly weak July reading shows the central bank can wait and see.

“July for us is quite a seasonally strong month usually, particularly with a lot of the utilities and government price settings in the month of July ready for the financial year,” she said.

Read more here: ABC


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