SYDNEY, Feb 29 (Reuters) - A private-sector gauge of Australian inflation eased in February as fuel prices fell, while measures of core prices also showed no signs of upward pressure.
The benign underlying trend should reassure the Reserve Bank of Australia (RBA) that it can keep policy loose when it holds its monthly board meeting on Tuesday.
The central bank is widely expected to hold the cash rate at a record low 2 percent and signal there is scope to ease further should that be necessary. AU/INT
Monday's survey from the Melbourne Institute showed consumer prices fell 0.2 percent in February, partially reversing a rise of 0.4 percent in January.
The annual pace slowed to 2.1 percent from 2.3 percent, and remained stuck in the lower half of the RBA's target band of 2 to 3 percent. A measure of underlying inflation pressure, the trimmed mean, also slowed to 1.7 percent from 2.0 percent.
"This month's fall in inflation reverses some of last month's beginning of year spike. February's fall reflects pass-through effects stemming from oil price volatility," said Sam Tsiaplias, Senior Research Fellow at the Melbourne Institute.
Costs for tradable goods and services fell 0.5 percent in February, unwinding most of January's 0.6 percent rise. Non-tradable prices, those not determined by international competition, eased 0.1 percent, also reversing January's 0.2 percent increase.
Inflation excluding fuel, fruit and vegetables drifted down 0.1 percent in February, slowing the annual pace to 2.1 percent.