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A private gauge of Australian inflation dropped in June on weaker fuel and furniture prices, signaling little cost pressure on consumers in the second quarter.
Consumer prices fell 0.2 percent last month, the first reduction since November, according to an index compiled by TD Securities Inc. and the Melbourne Institute released in Sydney today. From a year earlier, prices rose 1.6 percent in June, the fourth consecutive monthly reading below the lower end of the central bank’s 2 percent to 3 percent target range.
Reserve Bank of Australia Governor Glenn Stevens will keep the benchmark interest rate unchanged tomorrow, economists surveyed by Bloomberg News predicted, after he reduced borrowing costs by 75 basis points in the past two months to 3.5 percent. A sluggish global recovery and restrained consumer confidence have helped ease inflation, with core consumer prices advancing in the first quarter at the slowest pace since 1998.
“Given the RBA has moved rapidly by cutting 75 basis points since May, with 58 basis points passed on to the standard variable mortgage rate to deliver accommodative monetary policy, we believe the RBA is in a comfortable position to sit tight,” said Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore. “Given heightened global uncertainty, accommodative monetary policy puts Australia in good stead for what lies ahead.”
Today’s report showed the price of automotive fuel plunged 8 percent in June, after falling 2.8 percent in May.
The Melbourne Institute is a research unit of Melbourne University, and TD Securities is a division of Toronto-Dominion Bank (TD), Canada’s second-largest lender. The monthly inflation index measures the prices of more than 1,000 goods and services.
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