Inflation eases back to mid-point of RBA target

By Michael Janda

Inflation has eased back to the middle of the Reserve Bank‘s 2-3 per cent target band, according to a widely-watched private index.

The Reserve Bank holds its monthly board meeting tomorrow, but no analysts expect any change to the current cash rate target of 2. 5 per cent.

The TD Securities - Melbourne Institute Monthly Inflation Gauge was flat in August after rising 0. 2 per cent in July.

TD Securities head of Asia-Pacific research Annette Beacher says the moderation in price pressures will only reinforce the Reserve Bank’s stated desire to leave rates on hold.

However, the underlying figure - which excludes the most volatile price movements and is preferred by the RBA - was higher at 2. 7 per cent, even though that measure of prices fell by 0. 1 per cent in August.

In terms of what is driving price increases, fruit and vegetables were up 2. 3 per cent, furniture and furnishings up 1. 3 per cent and newspapers, books and stationery up 3. 8 per cent.

That left the annual pace of consumer price rises at 2. 5 per cent, right in the middle of the RBA‘s desired range.

Read more here: ABC


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