Australia inflation gauge rises slightly in Jan; annual pace slows

SYDNEY, Feb 3 (Reuters) - A private gauge of Australian inflation rose only marginally in January while the annual pace slowed a touch, a welcome moderation after price pressures took an unexpected spike higher the previous month.

The TD Securities-Melbourne Institute's monthly measure of consumer prices edged up 0.1 percent in January from December, when it had jumped 0.7 percent.

The annual pace slowed to 2.5 percent, from 2.7 percent, putting it bang in the middle of the Reserve Bank of Australia's (RBA) long-term target of 2 to 3 percent.

The benign outcome would be a comfort to the RBA after official figures on consumer prices showed a surprisingly sharp increase in inflation for the last quarter of 2013.

TD's head of Asia-Pacific research, Annette Beacher, said the result was notable as January was usually a seasonally strong month for the gauge.

"If we exclude the seasonal jump in education fees, utility prices and transport fares, price pressures appeared to start 2014 on a particularly soft note, somewhat of a relief after the shock price increases featured in our December report."

The RBA holds its first policy meeting of the year on Tuesday, and while no move in the 2.5 percent cash rate is expected, analysts have wondered whether it would sound a warning note on inflation.

Monday's report showed the usual seasonal price rises for education, urban transport fares and utilities in January, but those were offset by falls in clothing and footwear, holiday travel and accommodation, and newspapers, books and stationery.

Measures of underlying inflation were also more subdued. The trimmed mean, which takes out the biggest prices rises and falls, was flat for January, compared to an increase of 0.4 percent in December.

Annual growth in the trimmed mean slowed to 2.7 percent, from 2.98 percent.

Excluding petrol, fresh fruit and vegetables, the gauge rose 0.1 percent in January to be up only 1.6 percent for the year.

Prices for tradable goods, where there is a lot of competition from imports, fell by 0.4 percent in January to unwind some of December's outsized 1.5 percent increase.

Inflation in non-tradables items, mainly services such as education and health, picked up by 0.4 percent in the month but eased a touch to 2.8 percent in annual terms.

(Reporting by Wayne Cole; Editing by Leslie Adler)

((Wayne.Cole@thomsonreuters.com)(612 9373 1813)(Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net))

Keywords: AUSTRALIA ECONOMY/INFLATION