Back To Listing

Inflation Expectations up in April led by Melbourne, Adelaide & Perth

Source: Roy Morgan Single Source: Interviews with an average of 4,000 Australians per month aged 14+ (April 2010 – April 2018).
In April Australians expected inflation of 4.5% per year over the next two years. This is up 0.2% from a month ago, and also up 0.1% on a year ago in April 2017.

Analysing Inflation Expectations in Australia’s major capital cities shows Inflation Expectations over the last year have increased in most cities led by Melbourne, Adelaide and Perth. However, a notable exception is Australia’s largest city of Sydney which has seen a decline in Inflation Expectations. The Inflation Expectations trends of Australia’s largest cities are covered in detail later in the release.

Despite this month’s increase Inflation Expectations are still well below the eight year average of 5.0%. April Inflation Expectations are based on a nationwide face-to-face survey of 5,538 Australians aged 14+.


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

Australian Inflation Expectations - April 2018 - 4.5%

Source: Roy Morgan Single Source: Interviews with an average of 4,000 Australians per month aged 14+ (April 2010 – April 2018).


Inflation Expectations up in New South Wales, Queensland and Tasmania

Analysis of Inflation Expectations by State shows Inflation Expectations rising in New South Wales to 4.3%, up in Queensland to 5% and now highest of any State in Tasmania on 5.3%.

In contrast Inflation Expectations fell to 4.6% in Victoria and were also down in South Australia to 4.1% and down to 4% in Western Australia which again has the lowest Inflation Expectations of any State.


Inflation Expectations higher for L-NP, ALP and Greens supporters in April

Analysing Inflation Expectations by Federal voting intention shows supporters of both major parties driving the index higher in April. Inflation Expectations for ALP supporters increased 0.3% to 4.5% and are now in line with the national average while Inflation Expectations for L-NP supporters increased 0.4% to 4.1%.

There was little change for supporters of other parties with the Inflation Expectations of Greens supporters up 0.1% to 4% while supporters of Independents/Others have unchanged Inflation Expectations of 4.8%.


Inflation Expectations down in Sydney, but up in Melbourne, Perth & Adelaide

Analysing Inflation Expectations in Australia’s capital cities and Tasmania reveals rising Inflation Expectations in most of Australia over the last year with the notable exception of Australia’s largest city.

Inflation Expectations in Sydney for the six months to April 2018 have fallen 0.4ppts to 4.2% compared to 4.6% a year ago when they were clearly the highest of any capital city.

Melbourne’s Inflation Expectations have gone in the opposite direction from a year ago, now up 0.4ppts to 4.6% and now the highest of any of Australia’s five main capital cities.

Inflation Expectations have also increased in Australia’s smaller cities up by 0.4ppts to 4.4% in Adelaide and up by 0.3ppts to 4.0% in Perth. However, despite this increase, residents of Perth continue to have the lowest Inflation Expectations of any of Australia’s five main capital cities.

Tasmania now has higher Inflation Expectations than any of the mainland capital cities with Inflation Expectations in the island State up 0.3ppts to 4.7%.

Queensland capital Brisbane now has Inflation Expectations of 4.4% which are virtually unchanged on a year ago although now just below the national average of 4.5%.


Inflation Expectations by Capital City 6 months to April 2017 v 6 months to April 2018

Australian Inflation Expectations by Capital City - April 2018

Source: Roy Morgan Single Source: November 2016 – April 2017, n=25,843 and November 2017 – April 2018, n=25,871.  Base: Australians 14+.


Michele Levine, CEO, Roy Morgan, says Inflation Expectations increased in April and are up over the past year led by increases in Melbourne, Adelaide and Perth:

“Roy Morgan Inflation Expectations are up 0.2% to 4.5% in April and are also 0.1% higher than a year ago. Inflation Expectations have now been in a narrow band between 4.3% to 4.5% for ten months but haven’t broken out above this level since late 2014.

“Analysing Inflation Expectations in Australia’s major capital cities shows that it is the southern cities of Melbourne, Adelaide and Perth that have driven Inflation Expectations higher over the last year. Inflation Expectations of Melburnians are at 4.6% for the six months to April 2018 a significant 0.4ppts higher than a year ago and now the highest of any of Australia’s five largest capital cities.

“Inflation Expectations have also increased in Adelaide and Perth but are virtually unchanged in Brisbane from a year ago. In contrast to other major cities Inflation Expectations in Sydney are down by 0.4ppts from a year ago to 4.2%.

“Treasurer Scott Morrison’s Federal Budget handed down in early May has delivered income tax cuts for middle income Australians taking effect in July and projects a return to surplus sooner than expected.

“The best start to a year for Consumer Confidence since 2013 and Business Confidence since 2014 indicate Australians are positive about the economy. The increase in confidence combined with the larger take home pay Australians will soon enjoy should result in increased spending which will add upward pressure to Inflation Expectations in the months ahead.”

This face-to-face research on Australian inflation expectations was conducted during the month of April 2018 with an Australia-wide cross-section of 5,538 Australians aged 14+.


Monthly Roy Morgan Inflation Expectations Index (2010 – 2018)

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

4.5

4.4

4.5

4.5

4.5

4.4

2018

4.5

4.4 4.3 4.5

4.4

Monthly
Average

5.0

4.9

5.0

5.1

5.1

5.1

5.1

5.0

5.0

5.0

4.9

4.9

5.0

Overall Roy Morgan Inflation Expectations Average: 5.0


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 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.

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