Consumer prices were unchanged in June, bringing inflation back within the central bank’s official target range, a private measure of inflation shows.
The news improves chances the Reserve Bank of Australia’s board will again leave rates on hold at its next monthly meeting tomorrow.
The TD Securities-Melbourne Institute monthly inflation gauge was flat in June, after slowing to 0.2 per cent in May from 0.3 per cent in April.
Over the year to June, the indicator rose 2.9 per cent, in line with the 2 to 3 per cent medium-term target the RBA uses.
The RBA board has left the official cash rate at 4.75 per cent since last lifting it November 2010.
A rate hike isn’t likely when the board meets, TD Securities head of Asia-Pacific research Annette Beacher said.
‘‘Along with ongoing ructions in international financial markets, today’s soft June month report provides fodder for the RBA Board to sit tight tomorrow,’’ she said. ‘‘We raise the possibility, however, there may not be a strong case for an August tightening should forthcoming activity data disappoint.’’
The June gauge showed rents continued to creep higher, rising 2.8 per cent over the 12 months to June, the highest annual inflation rate in two years.
Other contributors were fruit and vegetables (which rose 6.8 per cent in June), holiday travel, audio visual and computing.
That was offset by a 5.3 per cent fall in the price of petrol.Ms Beacher said with the June data to hand, the headline consumer price index (CPI) was now expected to be 3.4 per cent higher than a year ago.
She forecast underlying CPI to rise 0.6 per cent, to be 2.4 per cent higher than a year ago.
‘‘We remain of the view that the inflation trough is firmly in the rear view mirror, and it boils down to how rapidly inflation pressures build as capacity constraints continue to be tested,’’ she said.
AAP