SYDNEY (Reuters) – Australian business conditions fell below their long-term average in May as sales and profit growth slowed, a survey showed on Tuesday, while cost pressures showed signs of picking up again.

The National Australia Bank (NAB) survey revealed its business conditions index fell 1 point to +6, well below its long-term average. This was driven by a decline in the sales and profit index, although the employment index rose after falling a month earlier.

Its business confidence index fell 5 points to -3.

“Overall, the message here is mixed for the RBA,” said Alan Oster, NAB’s chief economist.

“There are warning signs on the growth outlook but also reasons to be very cautious about the inflation outlook, and we expect the RBA to keep rates on hold for some time as they move through these conflicting risks.” are.”

The Reserve Bank of Australia (RBA) left interest rates unchanged at 4.35% for the fourth consecutive meeting last month but has yet to make a decision on policy. It said it was wary of any upside inflation risks.

Markets see interest rates staying at current levels for a long time, with the first rate cut not fully due before July next year.

The NAB survey shows that cost pressures picked up again in May.

Quarterly growth in retail prices rose to 1.6% from 1.0% previously, while labor costs and procurement costs also increased to 2.3% and 1.9%, from 1.5% and 1.3% previously.

“We’ve been cautious for some time that the inflation path from here is likely to be gradual and uneven, and the survey results really reinforce that message,” Oster said.

(Reporting by Stella Q; Editing by Sam Holmes)