In November Australians expected inflation of 3.4% annually over the next two years, down 0.1% points from October but still up 0.2% points on the record low in August. Inflation Expectations are still a significant 0.6% points below the pre-pandemic month of March 2020.
Over the last few months Inflation Expectations have increased from their record low of 3.2% and when assessed by home ownership status the drive higher has come from Australian home owners who now expect inflation of 3.4% annually over the next two years – up 0.3% points since August.
In this comparison Australians who are paying off their home now have the lowest Inflation Expectations at 3.1%, up only 0.1% points since August, while Australians who are renting again have the highest Inflation Expectations at 3.6%, but this is unchanged since August.
Inflation Expectations by Home Ownership Status August 2020 cf. November 2020
Source: Roy Morgan Single Source: Aug. 2020, n=6,119 and Nov. 2020, n=6,082. Base: Australians aged 14+.
Victorian Inflation Expectations up in November as ‘Lockdown 2.0’ finally ends
The opening up of Australia continued during November with border restrictions between states coming down throughout the month and Victoria fully out of lockdown in late October. Perhaps unsurprisingly, the biggest increase in Inflation Expectations for November was in Victoria, up 0.2% points to 3.4%.
On a State-based level Inflation Expectations are now highest in WA at 3.6% (down 0.1% point), SA at 3.6% (up 0.2% points) and Queensland at 3.5% (unchanged) - all above the national average.
Inflation Expectations are below the national average in New South Wales at 3.2% (down 0.5% points) and Tasmania at 3.3% (down 1.1% points).
On a regional basis Inflation Expectations are higher in Country Areas and are now at 3.6% (down 0.2% points) compared to 3.3% in Capital Cities (unchanged).
Inflation Expectations Index long-term trend – Expected Annual Inflation in next 2 years
Source: Roy Morgan Single Source: Interviews an average of 4,400 Australians aged 14+ per month (April 2010 – Nov. 2020).
See below for a comprehensive list of RBA interest rate changes during the time-period charted above.
Roy Morgan CEO Michele Levine says Inflation Expectations in November are at 3.4%, down slightly on October but up 0.2% points since the record low in August and are being driven higher by Australian home owners: