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Inflation Expectations stuck at lowest in over two years

Source: Roy Morgan Single Source: Interviews an average of 4,000 Australians per month aged 14+ (April 2010 – March 2019).

In March, Australians expected inflation of only 4% per year over the next two years. This is unchanged on February but down a significant 0.3% on a year ago in March 2018 and the index remains at its lowest since late 2016 for a second straight month.

Inflation Expectations decreased across employment categories. The largest falls have come amongst the unemployed and under-employed as well as full-time workers. Inflation Expectations for part-time workers are virtually unchanged on a year ago. See below for a full analysis of these results in more detail.

Inflation Expectations have remained significantly below the nine year average of 4.9% in March. Inflation Expectations are based on personally interviewing a nationwide sample of 4,069 Australians aged 14+ face-to -face in their own homes.

Roy Morgan Inflation Expectations Index – Expected Annual Inflation in next 2 years
 
Source: Roy Morgan Single Source: Interviews an average of 4,000 Australians per month aged 14+ (Apr. 2010 – Mar. 2019).


Inflation Expectations now highest in Queensland & Tasmania, lowest in WA

Analysis of Inflation Expectations by State shows Inflation Expectations presenting a mixed bag in March, up in three States, NSW, Victoria and WA;, down in two States, Queensland and SA; and unchanged in Tasmania at 4.3% - the equal highest Inflation Expectations of any State.

Inflation Expectations in Queensland were down slightly in March and are now equal with Tasmania at 4.3% as the highest of any State. Inflation Expectations also fell in South Australia and are now right on the national average at 4%.

In contrast there were three States for which Inflation Expectations increased in March led by Victoria, which now has Inflation Expectations in line with the national average at 4%.

Despite still having Inflation Expectations marginally below the national average Inflation Expectations also increased in New South Wales to 3.9% and in Western Australia to 3.8%. Once again Western Australia has the lowest Inflation Expectations of any State.

Inflation Expectations by State: February 2019 cf. March 2019


Source: Roy Morgan Single Source: Feb. 2019, n=4,234 and March 2019, n=4,069. Base: Australians 14+.

Inflation Expectations up for ALP supporters but down for L-NP supporters in March

Inflation Expectations for Australian electors increased slightly to 3.9% in March and are now just below the national average of 4%.

Inflation Expectations for supporters of the major parties diverged further in March with the index decreasing by 0.2% for L-NP supporters to only 3.4%. In contrast the Inflation Expectations of ALP supporters increased by 0.2% to 4.1%.

Greens supporters now have the lowest Inflation Expectations of any group after another fall, down by 0.5% to 3.3%. Once again it is supporters of Independents/Others who still have the highest Inflation Expectations of any group up by 0.1% to 4.4%.

Inflation Expectations down across all employment categories, but highest for unemployed

Analysing Inflation Expectations by employment status shows declines across all employment categories compared to this time last year. Inflation Expectations for the workforce in general have declined by 0.4% over the last year to 3.8% in March 2019 and remain below the national average of 4%.

Driving the decline are full-time workers who have clearly the lowest Inflation Expectations of any employment category at only 3.4%, down 0.5%. Australians employed part-time have seen the smallest change for Inflation Expectations compared to a year ago now at 4.1%, down by only 0.1%.

There have been big declines in Inflation Expectations compared to a year ago for unemployed and under-employed Australians and those Australians not in the workforce at all which includes those who are retired, on home duties or studying without working.

Unemployed Australians again have the highest Inflation Expectations of any employment category at 5%, although this is down 0.5% on a year ago while Inflation Expectations for the under-employed have dropped 0.6% to 4.2%. Inflation Expectations for those not in the workforce are down 0.5% to 4.4%.

Inflation Expectations by Employment Status March 2018 cf. March 2019


Source: Roy Morgan Single Source: March 2018, n=3,969 and March 2019, n=4,069. Base: Australians 14+.

Michele Levine, CEO, Roy Morgan, says Inflation Expectations have remained at a two-year low of 4% in March with Inflation Expectations down for all categories of employment including full-time employees, the unemployed and the under-employed:


“Roy Morgan Inflation Expectations were unchanged at 4% in March although they are down 0.3% from a year ago. Inflation Expectations in March remain at their lowest since late 2016.

“Over the last year Inflation Expectations have fallen throughout the workforce and across all categories of employment. Unsurprisingly, it is Australians in full-time employment who again have the lowest Inflation Expectations of any employment category at only 3.4% in March 2019, down by a significant 0.5% from a year ago and well below the national average of 4%.

“In contrast it is unemployed Australians who have the highest Inflation Expectations of any employment category at 5%, although this is also down by 0.5% from a year ago. The Inflation Expectations of Australians not in the workforce (now 4.4%) and for under-employed Australians (4.2%) are both significantly higher than the general workforce (3.8%).

“These results show that Australians who are not earning a wage, or are looking for more work, generally expect higher inflation than those Australians working in full-time employment and better placed to deal with rising prices.

“Inflation Expectations have definitely dropped early in 2019 as Australians get set to vote in a Federal Election next month which many expect will herald a change in Government. Although the ALP has been the long-time favourite to win the election the latest Roy Morgan Poll on Federal voting intention released this week showed the race tightening between the two major parties with the ALP 51% cf. L-NP 49% on a two-party preferred basis.”


This in-depth face-to-face research on Australian inflation expectations was conducted during the month of March 2019 with an Australia-wide cross-section of 4,069 Australians aged 14+.



Monthly Roy Morgan Inflation Expectations Index (2010 – 2019)

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

4.5

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

4.5

4.4

4.5

4.5

4.5

4.4

2018

4.5

4.4

4.3

4.5

4.3

4.5

4.3

4.3

4.3 4.5 4.3 4.2

4.4

 2019  4.2  4.0  4.0                   4.1

Monthly
Average

4.9

4.8

4.9

5.1

5.0

5.0

5.0

4.9

4.9

4.9

4.9

4.9

5.0

Overall Roy Morgan Inflation Expectations Average: 4.9


The questions 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 upgo downon 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.

For comments or more information please contact:
Roy Morgan - Enquiries
Office: +61 (03) 9224 5309
askroymorgan@roymorgan.com


About Roy Morgan

Roy Morgan is the largest independent Australian research company, with offices throughout Australia, as well as in Indonesia, the United States and the United Kingdom. A full service research organisation specialising in omnibus and syndicated data, Roy Morgan has over 70 years’ experience in collecting objective, independent information on consumers.

Margin of Error

The margin of error to be allowed for in any estimate depends mainly on the number of interviews on which it is based. Margin of error gives indications of the likely range within which estimates would be 95% likely to fall, expressed as the number of percentage points above or below the actual estimate. Allowance for design effects (such as stratification and weighting) should be made as appropriate.

Sample Size

Percentage Estimate

40%-60%

25% or 75%

10% or 90%

5% or 95%

1,000

±3.0

±2.7

±1.9

±1.3

5,000

±1.4

±1.2

±0.8

±0.6

7,500

±1.1

±1.0

±0.7

±0.5

10,000

±1.0

±0.9

±0.6

±0.4

20,000

±0.7

±0.6

±0.4

±0.3

50,000

±0.4

±0.4

±0.3

±0.2