SYDNEY, May 4 (Reuters) - A private-sector gauge of Australian inflation moderated further in April as prices rose at the slowest pace in over a decade, suggesting inflation alone should be no bar to a cut in interest rates this week.
The TD Securities-Melbourne Institute’s monthly measure of consumer prices rose 0.3 percent in April, from March when it rose 0.4 percent.
The annual pace ticked down to 1.4 percent, from 1.5 percent and well below the floor of the Reserve Bank of Australia’s (RBA) target band of 2 to 3 percent.
The central bank holds its monthly policy meeting on May 5 and markets are undecided on whether it will follow up a February easing with another quarter point cut to 2.0 percent.
Interbank futures <0#YIB:> imply around a 64 percent probability of a move, while a Reuters poll of 27 analysts found 20 expected a cut on Tuesday.
The TDMI survey showed a marked moderation in non-tradable prices, those for goods and services not determined by international competition. That was a notable shift as home-grown inflation has been stubbornly high for some years.
The annual pace of non-tradable inflation braked to just 1.8 percent in April, down from 2.5 percent the month before and the lowest reading in at least a decade.
“For the RBA Board meeting, the combination of sub-trend economic growth, lower terms of trade and a low inflation environment all tilt the odds towards the RBA delivering a cut to 2 percent,” said Annette Beacher, chief Asia-Pac macro strategist at TD Securities.
Measures of underlying inflation also eased in April.
The trimmed mean CPI was up 1.4 percent on a year ago, compared to 1.6 percent in March. Inflation excluding fuel, fruit and vegetables slowed to 1.4 percent from 1.9 percent.
The official measure of consumer prices (CPI) rose at an annual pace of 1.3 percent in the first quarter, with underlying inflation at 2.3 percent.
For April alone, the TDMI gauge showed price rises for medical, dental and hospital services, holiday travel and accommodation and petrol.
These were partly offset by falls in alcoholic beverages, garments and audio, visual and computing equipment and services. Prices for fruit and vegetables also retreated after an increase in March. (Reporting by Wayne Cole; Editing by Eric Meijer)