Australia inflation gauge subdued in November: TDMI

[SYDNEY] A private gauge of Australian price pressures stayed subdued in November as a drop in petrol helped offset a jump in fruit and vegetables, a benign inflationary backdrop that offers scope for interest rates to remain at record lows.

The TD Securities-Melbourne Institute's monthly measure of consumer prices edged up 0.1 per cent in November, following a 0.2 per cent rise in October.

The annual pace of inflation slowed to 2.2 per cent from 2.3 per cent, and was still near the floor of the Reserve Bank of Australia's (RBA) long-term target band of 2-3 per cent.

Notably, prices for tradable goods and services edged up by only 0.1 percent in the month and 2 percent for the year, suggesting declines in the Australian dollar were having only a limited impact on inflation as yet.

That should reassure the Reserve Bank of Australia (RBA) that it can keep rates unchanged at 2.5 per cent at its monthly policy meeting on Tuesday. Rates have not moved since August last year and are considered certain to stay on hold this month.

Monday's survey showed price rises for fruit and vegetables, newspapers, books and stationery and garments added the most to inflation in November. That was offset by falls for petrol, holiday travel and accommodation and games, toys and hobbies.

The various measures of underlying inflation also remained restrained.

The trimmed mean rose 0.1 per cent in November, following a matching increase in October. The annual pace ticked down to 2.4 per cent from 2.5 per cent.

Inflation excluding fuel, fruit and vegetables increased by 0.2 per cent in the month, and ran at just 2.0 per cent for the year.

Prices in the non-tradables sector were muted with annual inflation holding at 2.4 per cent, well off a high of 3.4 per cent earlier in the year.


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