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Australia inflation gauge climbs 0.6% in June

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A private-sector gauge of Australian consumer prices rose sharply in June on higher costs for petrol and food, though measures of underlying inflation remained muted suggesting there was plenty of room to cut interest rates.

[SYDNEY] A private-sector gauge of Australian consumer prices rose sharply in June on higher costs for petrol and food, though measures of underlying inflation remained muted suggesting there was plenty of room to cut interest rates.

The Reserve Bank of Australia (RBA) holds its monthly policy review on Tuesday and is widely expected to hold rates for the moment at a record low of 1.75 per cent.

Most analysts see more chance of an easing in August should the official consumer price report for the second quarter, due later this month, show annual inflation remaining around 1.5 per cent.

The Melbourne Institute's monthly inflation gauge for June climbed 0.6 per cent, after a very soft 0.2 per cent decline in May. The annual inflation rate picked up to 1.5 per cent, from one per cent, but was still below the RBA's long-run target band of 2 per cent to 3 per cent.

The trimmed mean measure edged up a more modest 0.2 per cent, while the annual pace ticked up to 1.2 per cent. Excluding petrol and fresh fruit and vegetables, inflation rose 0.2 per cent in the month and 1.8 per cent for the year.

Contributing to the overall change in June were price rises for automotive fuel, holiday travel and accommodation and fruit and vegetables.

These were partly offset by falls in clothing and footwear and insurance and financial services.

REUTERS