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Inflation Expectations of Home Owners lower than a year ago

In July Australians expected inflation of 4.3% per year over the next two years. This is down 0.2% from a month ago, and unchanged on a year ago in July 2017. Inflation Expectations have now tracked in a narrow range between 4.3-4.5% for 13 straight months since July 2017.
In July Australians expected inflation of 4.3% per year over the next two years. This is down 0.2% from a month ago, and unchanged on a year ago in July 2017. Inflation Expectations have now tracked in a narrow range between 4.3-4.5% for 13 straight months since July 2017.

However, analysing Inflation Expectations by home ownership status shows Inflation Expectations for home owners are lower than a year ago while Australians paying off their home or renting now have higher Inflation Expectations than a year ago. See below for analysis of these results in more detail.

Inflation Expectations remain well below the eight year average of 5.0%. July Inflation Expectations are based on a nationwide face-to-face survey of 5,288 Australians aged 14+.

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

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

Inflation Expectations down in Australia’s four largest States in July – now lowest in WA

Analysis of Inflation Expectations by State shows Inflation Expectations down in New South Wales to 4.1%, down in Victoria to 4.4%, down in Queensland to 4.4% and down in Western Australia to 3.6% - now clearly the lowest of any State.

In contrast Inflation Expectations in Australia’s smallest State Tasmania increased to 5.4% and were unchanged at 4.7% in South Australia.

Inflation Expectations down for supporters of the L-NP, ALP & Greens in July

Inflation Expectations for L-NP supporters were down 0.1% to 3.5% in July and are still well below supporters of all other parties. In contrast Inflation Expectations for ALP supporters remain just above the national average although down 0.1% to 4.5%.

Supporters of Independents/Others again have the highest Inflation Expectations of any supporters unchanged at 4.9% while Greens supporters Inflation Expectations fell 0.3% to 3.9%.

Inflation Expectations down for home owners but up for mortgagors and renters

Analysing Inflation Expectations in Australia by home ownership status in the three months to July 2018 compared to the same three month period a year ago shows Inflation Expectations are down for home owners from a year ago while Inflation Expectations have increased for mortgagors and renters.

Inflation Expectations for Australian home owners for the three months to July 2018 dropped to only 3.8%, down 0.1% on the same period a year ago.

Australians who are paying off their home, also known as mortgagors, now have Inflation Expectations of 4.1% in the three months to July 2018, up 0.1% on a year ago although still below the national average.

Inflation Expectations for Australians who are renting are clearly higher than for other categories of home ownership now at 5% for the three months to July 2018 up by 0.2% from a year ago.

In the three months to July 2018 Inflation Expectations for Australia as a whole were 4.4% compared to 4.3% for the same period in 2017.

Inflation Expectations by Home Ownership Status May – July 2017 cf. May – July 2018


Source: Roy Morgan Single Source: May – July 2017, n=13,375 and May – July 2018, n=13,700. Base: Australians 14+. 

Michele Levine, CEO, Roy Morgan, says Inflation Expectations in Australia have been very stable now stuck in a narrow band between 4.3-4.5% for over a year, however there are different factors at play when one drills down into the figures:

“Roy Morgan Inflation Expectations are down 0.2% to 4.3% in July and unchanged on a year ago. Inflation Expectations have now been stuck in a narrow band between 4.3-4.5% for thirteen months since July 2017 – easily the longest period of stability since the index began in April 2010.

“However, when one analyses the data at a more granular level, there are differences between how different sectors of the Australian economy are feeling about inflation. Each segment comprises around a third of the overall population with slightly more renters (34.5%) than either home owners (32.5%) or mortgagors (29%) and a further 4% falling outside these three categories.

“Australian home owners are one group who now have lower Inflation Expectations than a year ago. In the three months to July 2018 Australian home owners have Inflation Expectations of only 3.8%, down 0.1% from the same three month period a year ago and perhaps reflective of the softening of house prices observed in many parts of Australia this year.

“In contrast Inflation Expectations for both mortgagors currently paying off their homes and renters have increased over the last year. Australians paying off their home now have Inflation Expectations of 4.1% for the three months to July up by 0.1% from the same period a year ago while Australians who rent have clearly higher Inflation Expectations of 5% up by 0.2% from a year ago.

“The differing circumstances facing Australian home owners, Australians still paying off their homes and renters are illustrated by the different attitudes expressed towards the future course of Australian inflation.

“Roy Morgan’s extensive and in-depth data collected with over 50,000 Australians each year as part of the Roy Morgan Single Source survey allows keen understanding how different sectors of Australian society view the state of the Australian economy, and its future direction.

“In addition to Inflation Expectations key Roy Morgan indicators including ANZ-Roy Morgan Consumer Confidence, Business Confidence, real unemployment and under-employment give a rounded and comprehensive view of the state of the Australian consumer and are powerful indicators for the overall health of the Australian economy.

“Contact Roy Morgan today to learn more about how your consumers and customers are tracking.”


This face-to-face research on Australian inflation expectations was conducted during the month of July 2018 with an Australia-wide cross-section of 5,288 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

4.5

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

4.4

Monthly
Average

5.0

4.9

5.0

5.1

5.0

5.0

5.0

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