Source: ABC News

Story By: Michael Janda

A private gauge shows inflation has passed its trough, and is likely to accelerate later in the year, which is expected to lead to further interest rate rises.

The TD Securities - Melbourne Institute monthly inflation gauge rose 0.2 per cent in May - a slower increase than its 0.3 per cent rise in April and 0.6 per cent jump in March.

The biggest price rises were for fruit and vegetables (up 3 per cent), rents (up 1.5 per cent) and books, newspapers and magazines.

Fuel prices also rose 0.5 per cent.

Offsetting the price increases were falls for travel and accommodation, alcohol and tobacco, and appliances, utensils and tools.

While the headline rate of inflation is now at 3.3 per cent, which is above the Reserve Bank's 2-3 per cent target, core inflation remained unchanged in May.

The underlying figure, which excludes the most volatile prices movements and is most closely watched by the RBA, was 2.4 per cent over the year to May - in the middle of the bank's target band.

To read the full story, follow this link: www.abc.net.au/news/stories/2011/06/06/3236418.htm