Australia inflation gauge shows pick up in Feb-TDMI

SYDNEY, March 3 (Reuters) - A private gauge of Australian inflation showed a pick up in both headline and underlying measures of price pressures for February, suggesting there could be diminishing scope for further cuts in interest rates.

The TD Securities-Melbourne Institute's monthly measure of consumer prices rose 0.2 percent in February, from January when it had edged up 0.1 percent.

The annual pace accelerated to 2.7 percent, from 2.5 percent, nudging it toward the top of the Reserve Bank of Australia's (RBA) long-term target band of 2 to 3 percent.

The survey's measure of trimmed mean inflation, which strips out the biggest price rises and falls in the month, climbed to 3 percent in February to test the top of the target band.

The central bank recently revised up its forecasts for inflation following a surprisingly large increase in the fourth quarter of 2013. It predicted underlying inflation would hit 3 percent by the middle of this year, but then expects it to slow back toward 2.5 percent over time.

The high reading on inflation was one reason the RBA decided to close the door on the prospect of further policy easing last month, saying rates were likely to stay at 2.5 percent for a while. The central bank holds its March meeting on Tuesday and is considered almost certain to repeat that steady outlook.

Monday's TD-MI survey showed price increases for petrol, fruit and vegetables, furniture and furnishings, and non-alcoholic beverages in February.

These were partially offset by falls in holiday travel and accommodation, bread and cereal products, and newspapers, books and stationery.

Excluding petrol, fruit and vegetables, inflation picked up to 2 percent in February, from 1.6 percent the previous month.

Annual inflation for goods and services easily tradable across borders held at 2.1 percent, having been pushed up by a weaker currency in recent months. Inflation for non-tradables, mostly domestic services, rose to 3.2 percent.

(Reporting by Wayne Cole; Editing by Shri Navaratnam)

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

Keywords: AUSTRALIA ECONOMY/INFLATION