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Australian Inflation Expectations up to 4.3% in July

Source: Roy Morgan Single Source: Interviews with an average of 4,000 Australians aged 14+ (April 2010 – July 2017).
In July Australians expect inflation of 4.3% per year over the next two years. This is up 0.1% in a month and inflation expectations are up 0.2% from a year ago in July 2016.

However, despite the recent uptick, Australian inflation expectations remain well below average inflation expectations over the last seven years of 5.1% according to the latest Roy Morgan research with 5,061 Australians aged 14+ interviewed in July.


Roy Morgan Inflation Expectations Index – Expected Annual Inflation in next 2 years

Roy Morgan Inflation Expectations Index - July 2017 - 4.3%Source: Roy Morgan Single Source: Interviews with an average of 4,000 Australians aged 14+ (April 2010 – July 2017).


Inflation Expectations in NSW, Victoria and South Australia drive national figure

Analysis by State shows inflation expectations are highest in South Australia at 4.6% closely followed by New South Wales and Victoria, both at 4.5%. Inflation expectations in Australia’s other States were below the national average: Queensland and Tasmania both at 4.1% and Western Australia at 3.5%.

Drilling down further and analysing Capital City inflation expectations over the past six years on a rolling annual basis shows inflation expectations have fallen across the board over the period.

Hardest hit have been the two most mining intensive States: Inflation expectations in Perth have fallen from 5.8% to 3.6%, down 2.2% while inflation expectations in Brisbane have fallen from 6.0% to 4.2%, down 1.8%. In contrast, inflation expectations in the other Capital Cities have all fallen by less than 1.5% since the height of the mining boom in 2011-12.


Inflation Expectations by Capital City: March 2011 – July 2017

Roy Morgan Inflation Expectations - Capital Cities: 2011-2017Source: Roy Morgan Single Source: Interviews with an average of 4,000 Australians aged 14+ (April 2010 – July 2017). 12 month moving average.

Analysing inflation expectations by Federal voting intention shows L-NP supporters and Greens supporters – both at 3.8% have the equal lowest inflation expectations below ALP supporters at 4.3% and supporters of Independents/ Others have clearly the highest inflation expectations of 4.8%.


Michele Levine, CEO, Roy Morgan says:

“Roy Morgan Inflation Expectations Index rose to 4.3% (up 0.1%) in July, reversing a slight dip in June. Inflation Expectations are clearly higher than a year ago in July 2016 (4.1%) and have been higher in every month so far of 2017 – this is worth noting as this consistent increase over seven months has never happened since this index began in April 2010.

“Inflation Expectations have been led higher in 2017 by sustained increases in Melbourne, Brisbane and Adelaide – although all still trail Australia’s largest city of Sydney which has consistently had higher inflation expectations than other cities over the past 12 months.

“Inflation expectations appear to have bottomed late in 2016 (although Western Australian capital Perth is a clear exception) and the most recent ANZ-Roy Morgan Weekly Consumer Confidence Rating released this week (118.4) shows Consumer Confidence has built on recent increases after bottoming in early May at the time of an underwhelming Federal Budget.”

This face-to-face Morgan Poll on Australian inflation expectations was conducted during the month of July 2017 with an Australia-wide cross-section of 5,061 Australians aged 14+.


For further information:

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Gary Morgan:

+61 3 9224 5213

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Michele Levine:

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Monthly Roy Morgan Inflation Expectations Index (2010 – 2017)

Year

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Yearly

Average

2010

n/a

n/a

n/a

5.9

5.8

5.5

5.6

5.4

5.5

5.8

5.6

5.8

5.7

2011

6.6

6.4

6.4

6.2

6.1

6.2

6.1

5.8

5.7

5.8

5.5

5.5

6.0

2012

5.4

5.5

5.9

5.9

6.0

6.2

5.9

5.9

5.8

5.7

5.6

5.4

5.8

2013

5.2

5.1

5.3

4.9

5.2

4.9

5.3

5.0

4.8

4.9

4.8

5.0

5.0

2014

5.1

5.2

5.2

5.1

5.1

5.3

5.0

4.8

5.0

4.8

4.9

4.4

5.0

2015

4.4

4.3

4.5

4.5

4.2

4.4

4.4

4.5

4.6

4.2

4.4

4.5

4.5

2016

4.3

4.2

4.2

4.2

4.0

4.0

4.1

3.9

4.1

4.1

3.9

4.2

4.1

2017

4.5

4.4

4.4

4.4

4.3

4.2

4.3

 

 

 

 

 

4.4

Monthly
Average

5.1

5.0

5.1

5.1

5.1

5.1

5.1

5.0

5.1

5.0

5.0

5.0

5.1

Overall Roy Morgan Inflation Expectations Average: 5.1















The questions that are used to calculate the Monthly Roy Morgan Inflation Expectations Index.

1) Prices.

“During the next 2 years, do you think that prices in general will go up, or go down, or stay where they are now?”

2a) If stay where they are now.

“Do you mean that prices will go up at the same rate as now or that prices in general will not go up during the next 2 years?

2b) If go up or go down.

“By about what per cent per year do you expect prices to (go up/ go down) on average during the next 2 years?”

3) If respondent says more than 5%.

“Would that be (x%) per year, or is that the total for prices over the next 2 years?”

The Roy Morgan Inflation Expectations Index is a forward looking indicator unlike the Consumer Price Index (CPI) and is based on continuous (weekly) measurement, and monthly reporting. The Roy Morgan Inflation Expectations Index is current and relevant.