The Reserve Bank is unlikely to push up interest rates tomorrow at its monthly board meeting after private credit figures showed a continued slowing in May with the annual rate hitting the slowest rate of growth more than two and a half years.

The credit figures were released by the RBA this morning, an hour or so after the TD Securities Melbourne Institute monthly inflation gauge for June showed an acceleration in headline price pressures and in the 12 month to June to 4.8%, up from around 4.5% in the year to May. On the face of it that is worrying and will probably be echoed by the Consumer Price Index for the June quarter, due for release in just over three weeks’ time.

But the big driver was the surging cost of oil and petrol which have risen 25% in the past year according to the survey. TD Securities said that stripping those out of the survey showed that the index was up just 0.1% in June, down from 0.2% in May and 0.4% in each of April and March, an indication that the RBA’s anti-inflation attack is taking root in the wider economy.

With retail sales and building approvals for May due for release on Wednesday and expected to show another month of easing to flat activity, the RBA will probably sit and do nothing at the meeting tomorrow, preferring to wait to August when it will have updated analysis of the CPI, the health of the economy and new forecasts for the next 18 months or so.

That’s why the latest private credit numbers are important: there was a rise in credit in May to a monthly rate of 0.6% from the low 0.4% reported in April. But the annual rate of growth again slowed in the year to May, to 13.4% from 14.1% the month before. The annual growth figure was the lowest since November, 2005.

Housing fell to an annual rate of 10.6% (11.1%) after the rise in lending in May (0.7% in April). The annual growth rate of house lending is now the slowest for close to a decade and will continue to slow as approvals fall. Personal lending rose 0.5% in May (0.1%) in April as the effects of the stockmarket slump and margin calls finished and the market rebounded. The annual growth figure eased to a rate of 8.8% (9.8% in April).

Business lending grew 0.6% in May (0.1% in April) but the annual growth figure continues to slow and hit a rate of 18.2% in the month from 19.3% in April. The May figure is now well down from the 23.7% growth rate in December, 2007 when business was borrowing extensively from the banks as the credit crunch cut off access to direct borrowings from the markets.