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Category: Economic Trends / Money and Monetary Policy / Oil and Gas / Retail

Inflation gauge shows price rises remain low

Monday, 29 Feb 2016 08:00:00 | Rebecca Hyam

A leading private sector index shows consumer price rises are well under control. (Alan Porritt, file photo: AAP)

The Reserve Bank is not expected to make any change to official interest rates at tomorrow's board meeting, despite a key report on inflation showing consumer prices eased this month.

The Melbourne Institute Monthly Inflation Gauge fell by 0.2 per cent in February, after a 0.4 per cent increase last month.

On an annual basis, the inflation gauge stands at 2.1 per cent, which is at the lower end of the Reserve Bank's 2-3 per cent target range.

There was a 5.6 per cent fall in the price of petrol this month, while holiday travel and accommodation costs slipped by 3.7 per cent.

The cost of furnishings, household equipment and services rose by 0.6 per cent and there was a 0.2 per cent rise in the cost of housing.

The Melbourne Institute's senior research fellow Sam Tsiaplias said lower crude oil prices were helping to keep inflationary pressures in check.

"February's fall reflects pass-through effects stemming from oil price volatility," he said.

"The fall is largely due to continued downward pressure in fuel prices, which fell by 5.6 per cent this month, following a 4.8 per cent fall last month."

The latest result represents the gauge's first fall in some time, although the monthly results have ranged from 0 to just 0.4 per cent since July last year, suggesting inflationary pressures remain benign.

Market analysts are unanimously betting the central bank will keep the cash rate on hold at 2 per cent at tomorrow's monthly meeting.

All 26 economists surveyed by Bloomberg have tipped official interest rates to remain unchanged in March.

AustraliaPlus


 

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