August 01, 2011
Source: www.news.com.au
Story By: Jordan Chong
CONSUMER prices are rising at the fastest pace in three months, led by higher food and energy costs, a measure of inflation shows.
The TD Securities-Melbourne Institute inflation gauge rose 0.3 per cent in July, after prices stayed flat in June, the survey published on Monday showed.
In the year to July, the inflation gauge rose 3.2 per cent, compared to a 2.9 per cent increase in the year to June.
The result was above the Reserve Bank of Australia's (RBA) target band for inflation of two to three per cent over the course of the economic cycle.
The survey showed that price increases in July were driven by the rising cost of fruit and vegetables, utility costs and holiday travel and accommodation.
But automotive, rents, clothing and footwear and computing prices were lower in July, the report said.
TD Securities head of Asia-Pacific research Annette Beacher said although the result was above the central bank's target for inflation, policymakers had to look beyond price rises when considering the level of official interest rates.
"There are considerable offshore headwinds associated with the United States and European sovereign debt issues, threatening the global economic recovery," Ms Beacher said in a statement.
"Closer to home, declining credit growth and the cautious consumer confirm that the economy is truly two-speed, overshadowing the ongoing good news of the private sector investment boom."
The RBA board was due to hand down its monthly interest rate decision at 2.30pm (AEST) on Tuesday.
While a higher-than-expected consumer price index report last week had raised the prospect of a central bank rate increase, 12 of the 15 economists surveyed by AAP last week tipped no change to the cash rate, which sits at 4.75 per cent.
Ms Beacher said she expected the RBA to keep rates on hold and was predicting one more rate rise between now and the end of the year, with November the most likely month.
The trimmed mean inflation gauge, which excludes volatile items such as automotive fuel, fruit and vegetables, rose 0.2 per cent in July, for an annual pace of 2.1 per cent.
Australian Bureau of Statistics (ABS) data showed the June quarter consumer price index (CPI) rose by 0.9 per cent, for an annual inflation rate of 3.6 per cent.
The CPI report was above market expectations.
To read the full story, follow this link: www.news.com.au/business/consumer-prices-up-for-july/story-e6frfm1i-1226105827710
