[SYDNEY] A private-sector gauge of Australian inflation ticked higher in January due to seasonal increases for services such as education and health care, while measures of core prices remained well restrained.
The benign underlying trend should reassure the Reserve Bank of Australia (RBA) that it can keep policy loose when it holds the first board meeting of the year on Tuesday.
The central bank is widely expected to hold rates at 2 per cent and signal there was scope to ease further should that be necessary.
Monday's survey from TD Securities and the Melbourne Institute showed consumer prices rose 0.4 per cent in January, from December when they edged up 0.2 per cent.
The annual pace quickened a touch to 2.3 per cent, from 2.0 per cent, but was still in the lower half of the RBA's target band of 2 to 3 per cent.
A measure of underlying inflation pressure, the trimmed mean, stood at 2 per cent and matched the official reading for the fourth quarter released last week. "Our Gauge reflects the usual seasonal jump in health and education expenses, offset a little by another decent step down in fuel prices," said Annette Beacher, chief Asia-Pacific macro strategist at TD Securities.
Health costs climbed 3.4 per cent in the month while education rose 2.3 per cent, as fees and charges for both increase almost automatically at the start of every year.
Going the other way there was a seasonal fall in holiday travel and accommodation costs, while petrol dropped sharply for a second straight month. "We also draw attention to the monthly and annual jump in tradable inflation, further confirmation that the weaker exchange rate is feeding through into higher imported costs,"added Beacher.
Costs for tradable goods and services rose 0.6 per cent in January to be up 3.0 per cent on the year, a lagged reaction to the local dollar's decline over the first half of 2015.
Yet there has also been a notable deceleration in non-tradable prices, those not determined by international competition such as services that make up well over half of the CPI basket. Inflation here edged up 0.2 per cent in the month, while the annual pace slowed to just 1.8 per cent.
Inflation excluding fuel, fruit and vegetables rose 0.6 per cent in January, while the annual pace stayed at 2.2 per cent.