A gauge of Australia’s annual inflation held above the top of the central bank’s target range in June after a jump in prices for fruit and vegetables.
Consumer prices advanced 3.6 percent from a year earlier, after gaining 3.7 percent in May, according to an index compiled by TD Securities Ltd. and the Melbourne Institute released in Sydney today. Prices increased 0.3 percent from a month earlier, when they rose 0.5 percent.
An economic expansion in Australia, one of the few countries to skirt last year’s global recession, has pushed inflation above the central bank’s target range of 2 percent to 3 percent. Governor Glenn Stevens increased the benchmark lending rate six times since early October to 4.5 percent and will tomorrow keep the rate unchanged, according to analysts surveyed by Bloomberg.
“Uncomfortably high inflation should not be particularly surprising since the Australian economy is all but fully employed,” said Annette Beacher, senior strategist at TD Securities in Singapore.
Beacher said Australia’s consumer price index, due to be published on July 28, probably rose 1 percent in the second quarter from the three months through March, for an annual gain of 3.4 percent.
“We believe this inflation news will be a key tipping point for the Reserve Bank to upwardly adjust the benchmark rate by a quarter percentage point to 4.75 percent, perhaps as soon as August,” she said.
Consumer prices rose 2.9 percent in the first quarter from a year earlier, the most since late 2008, a report by the Bureau of Statistics showed on April 28.
The Melbourne Institute is a research unit of Melbourne University and TD Securities is a division of Toronto-Dominion Bank, one of Canada’s largest lenders. The monthly inflation index measures the prices of 1,000 goods and services.