TD Securities – Melbourne Institute Inflation Gauge

The annual rate of inflation is staying well below the Reserve Bank’s 2% to 3% target, weighed down by falls in utility prices according to the TD Securities – Melbourne Institute Inflation Gauge. The Gauge rose 0.2% in July (v 0.1% in June) with the annual rate 1.6%. According to Annette Beacher, Chief Asia-Pac Macro Strategist at TD Securities “Our TD-MI Inflation Gauge accurately predicted the turnaround in tradable inflation in the June quarter and this July reading suggests further upward momentum is in train. The fall in utility prices in July was the result of a state government rebate, and is a one-off. Otherwise, inflation remains well contained, although annual rates may have found a trough. Cautious optimism from the RBA Governor in recent weeks speaks to us that the RBA Board is likely to leave the cash rate at 2% for quite some time”. The underlying inflation rate rose 0.1% to 1.5% year-on-year.