Back To Listing

Inflation Expectations up 0.2% to 4.5% in October

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

In October Australians expected inflation of 4.5% per year over the next two years. This is up 0.2% on a month ago but unchanged on a year ago in October 2017. Inflation Expectations have now tracked in a narrow range between 4.3-4.5% for 16 straight months since July 2017.

Analysing Inflation Expectations by political support shows Inflation Expectations for supporters of the two major parties are down compared to a year ago while Inflation Expectations for Greens are unchanged. However, Inflation Expectations for supporters of Independents and Others have increased substantially over the last year heading towards a Federal Election. See below for analysis of these results in more detail.

Inflation Expectations remain well below the eight year average of 5.0%. October Inflation Expectations are based on a nationwide face-to-face survey of 4,156 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 – October 2018).

Inflation Expectations again highest in Tasmania and again lowest in WA

Analysis of Inflation Expectations by State shows Inflation Expectations were up compared to a year ago in Tasmania to 5.6%, now the highest of any State, and also up significantly in South Australia to 4.9%, up in Queensland to 4.8% and up in Victoria to 4.6%.

Inflation Expectations were up in Australia’s largest State of NSW to 4.3% but remain below the national average while Inflation Expectations fell in Western Australia to 3.8% and are once again the lowest in the nation in Western Australia.

Inflation Expectations down for L-NP & ALP supporters but up for supporters of Others

Analysing Inflation Expectations in Australia for supporters of different political parties over the last year show falling Inflation Expectations for the supporters of the major parties but a significant increase in Inflation Expectations for supporters of Others and Independents.

Overall Australian Inflation Expectations are unchanged at 4.5% compared to a year ago but Inflation Expectations for electors have fallen by 0.1% to 4.3%.

The slight decrease in Inflation Expectations for electors is driven by falls in the Inflation Expectations for L-NP supporters, now at only 3.7% (down 0.3%) and also ALP supporters now down 0.4% to 4.2%.

Supporters of the two major parties have consistently lower Inflation Expectations than supporters of the Greens and supporters of Independents and Others.

Inflation Expectations for Greens supporters were unchanged at 4.4% compared to a year ago whilst supporters of Independents and Others have clearly the highest Inflation Expectations increasing by 0.4% to 5.1% from a year ago.

Inflation Expectations by Federal Voting Intention October 2017 cf. October 2018

Source: Roy Morgan Single Source: October 2017, n=4,414 and October 2018, n=4,156. Base: Australians 14+.

Michele Levine, CEO, Roy Morgan, says although overall Inflation Expectations in Australia have been remarkably stable the headline figure hides divergent trends among supporters of the major parties (ALP & L-NP) and supporters of Independents and others:

“Roy Morgan Inflation Expectations are 4.5% in October (up 0.2% since September) but unchanged on a year ago and have now been stuck in a narrow band between 4.2-4.5% for 23 straight months since December 2016.

“Perhaps unsurprisingly the long period of stability in Inflation Expectations tracks a record period of inactivity for Australian interest rates with the RBA leaving interest rates unchanged at a record low of 1.5% for over two years since mid-2016.

“However, although headline Inflation Expectations have changed very little there are significant differences between the Inflation Expectations of supporters of the major parties such as the ALP & L-NP and supporters of Independents and others.

“Over the past year the Inflation Expectations for L-NP supporters have dropped 0.3% to a low of 3.7% and Inflation Expectations of ALP supporters have dropped 0.4% to 4.2% pushing down the Inflation Expectations for Australian electors as a whole to 4.3% (down 0.1%).

“However, the Inflation Expectations of Greens supporters are unchanged at 4.4% while the Inflation Expectations of supporters of Independents and Other parties have in fact increased by 0.4% to 5.1% - far higher than the Inflation Expectations of the supporters of the major parties.

“The rising Inflation Expectations for supporters of Independents and Other parties as we head towards a Federal Election early next year spell trouble for the major parties trying to attract back the votes of these electors.

“Support for the two major parties dropped to only 77.1% at the 2016 Federal Election, down from 78.9% in 2013, 81.6% in 2010 and 85.5% in 2007. The trend has clearly been an increasing number of Australians looking for alternatives to the major parties such as the Greens, One Nation, the Palmer United Party – now called the United Australia Party, and flamboyant Independent politicians such as Nick Xenophon.

“This disconnect on Inflation extends to other issues such as employment and under-employment highlighted this week in an article by Dr. Cassandra Goldie of ACOSS in the Australian Financial Review: ‘Full employment is a fiction that doesn’t help policy’ that help to drive support for Independents and others who are perceived by an increasing number of Australians to be offering different solutions to pressing issues than the major parties.”

This in-depth face-to-face research on Australian inflation expectations was conducted during the month of October 2018 with an Australia-wide cross-section of 4,156 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

4.3

4.3 4.5

4.4

Monthly
Average

5.0

4.9

5.0

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: 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 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