Australia | Sep 29 2006
By Rudi Filapek-Vandyck
The anticipated fall of prices for automotive fuel and fruit and vegetables in September has largely offset price increases for financial services, house purchases, and holiday travel and accommodation during the month. As a result, the TD Securities/Melbourne Institute Monthly Inflation Gauge remained unchanged in September following a 0.6% rise in August.
According to TD Securities/Melbourne Institute, automotive fuel subtracted 0.5 percentage points from the change in the TD-MI Gauge over the month.
The trimmed mean of the TD–MI Inflation Gauge, a measure of underlying inflation, rose by 0.1%, following a 0.5% rise in August. The trimmed mean rose by 2.3% over the year to September 2006.
Stephen Koukoulas, Chief Strategist at TD Securities, comments it still appears inflation pressures remain elevated. He believes that because of this, the RBA is still likely to be hiking interest rates in the next few months.
Koukoulas added: “If petrol prices remain flat or fall further, we are likely to see headline inflation falling below underlying inflation. It is important to recall that trends in underlying inflation are likely to be more important for the RBA when assessing the monetary policy outlook.”
TD Securities/Melbourne Institute continue to forecast a headline ABS CPI inflation rate of 0.95 % for the September quarter 2006.