SYDNEY, Aug 8 Reuters Australian business conditions again proved solid in July with sales, profits and employment all above average, while a spike in labour costs and prices suggested inflationary pressures had yet to abate.

A survey from National Australia Bank Ltd NAB released on Tuesday showed its index of business conditions dipped to 10 in July, from an upwardly revised 11 in June. Its volatile measure of confidence bounced three points to 2.

The survey39;s measure of sales held firm at 16 in July, while the employment index stayed at 6 and profits at 10. Forward orders, a leading indicator of demand, rose one point to 1.

Business conditions continued to show resilience in July and have been broadly steady in the past couple of months at aboveaverage levels, said NAB39;s chief economist Alan Oster.

In a worrying sign for the inflation outlook, labour costs jumped to 3.7 in quarterly terms, likely reflecting mandated rises in minimum and award wages.

Purchase costs also picked up amid a sharp increase in electricity prices, while quarterly growth in retail prices almost doubled to 2.6.

That could bode ill for the next official reading of consumer prices, which had shown a welcome easing in inflation in the second quarter.

The Reserve Bank of Australia has been counting on a continued slowdown in inflation as it decided to skip another chance to raise rates at its August policy meeting last week.

The reality is that firms39; pricing decisions are affected…