In June 2021 Australians expected inflation of 4% annually over the next two years, up 0.3% and the highest Inflation Expectations since the pandemic began. Inflation Expectations are now 0.8% higher than they were a year ago – the biggest year-over-year increase since the series began in 2010.
Inflation Expectations are still 0.7% points below their long-term average of 4.7% but are now 0.5% points higher than the 2020 monthly average of 3.5%.
A look at Inflation Expectations by socio-economic quintile shows a strong co-relation between the two. Australians in the highest ‘AB Quintile’ have the lowest Inflation Expectations at only 3.4% in June, representing an increase of 1.3% points on a year ago – a larger increase than any other socio-economic quintile.
Inflation Expectations are progressively higher for each subsequent socio-economic quintile including 3.7% (up 0.5% points) for the ‘C Quintile’, 3.9% (up 0.8% points) for the ‘D Quintile’, 4.4% (up 1.1% points) for the ‘E Quintile’ and are highest of all for the ‘FG Quintile’ at 4.8% (up 0.6% points).
The socio-economic quintiles* rank all respondents by considering their education level as well as the income and occupation of the respondent if they’re a full-time worker. See below for further details on how the socio-economic quintiles of the population are calculated.
Inflation Expectations by Socio-Economic Quintile: June 2020 cf. June 2021
Source: Roy Morgan Single Source: June 2020, n=5,767; June 2021, n=6,064. Base: Australians aged 14+.
Inflation Expectations are now highest in Tasmania and lowest in South Australia
On a State-based level Inflation Expectations are now highest in Tasmania at 4.3%, an increase of 0.6% points from May. In addition, Inflation Expectations are slightly higher than the national average in both NSW at 4.1% (up 0.3% points) and Queensland at 4.1% (up 0.3% points).
Inflation Expectations in Victoria are in line with the national average at 4.0% (up 0.4% points since May) and Western Australia at 4.0% (up 0.6% points) while South Australia now has the lowest Inflation Expectations at 3.7%, down by 0.3% points.
The ANZ-Roy Morgan Consumer Confidence Rating for June was at 111.4, an increase of 15.1pts (+15.7%) from June 2020 a year ago. Since then Consumer Confidence has been hit by the short lockdowns in Brisbane, Perth and Darwin and by the extended lockdown in Sydney and in the first week of July dropped to 107.8 – its lowest for three months since early April.
Inflation Expectations Index long-term trend – Expected Annual Inflation in next 2 years
Source: Roy Morgan Single Source: Interviewing an average of 4,500 Australians aged 14+ per month (April 2010 – June 2021).
See below for a comprehensive list of RBA interest rate changes during the time-period charted above.