November 21, 2023

Inflation Expectations in mid-November are at 5.6% – significantly higher than the month of October (5.3%)

Topic: Press Release
Finding No: 9393
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The latest weekly Inflation Expectations are at 5.6% for the week of November 13-20, 2023 – up 0.1% points from a week ago and 0.3% points higher than the month of October.

A look at the monthly Inflation Expectations for October 2023 shows the measure at 5.3% for the month, an increase of 0.1% points on September 2023 (5.2%). In the month of October 2023 Australians expected inflation of 5.3% annually over the next two years – and this has continued to increase since.

The increase in Inflation Expectations in the month of October 2023 is important given that this is the first increase in the monthly indicator for four months since June 2023. The latest ABS monthly CPI estimate for September 2023 also showed an increase at 5.6%, up 0.7% points from 4.9% in the year to July 2023.

These figures shows that Inflation Expectations have increased in recent weeks, and this has flowed through to higher official inflation figures. The latest information on weekly Inflation Expectations is available to view each week in the Roy Morgan Weekly Update video on YouTube.

Monthly Inflation Expectations Index long-term trend – Expected Annual Inflation in next 2 years

Source: Roy Morgan Single Source: Interviewing an average of 4,800 Australians aged 14+ per month (April 2010 – Oct. 2023).

Record high petrol prices put upwards pressure on Inflation Expectations and Inflation

A leading factor driving the increase in Inflation Expectations in recent weeks and months has been the persistently high retail petrol price – now at an average of $2.02 per litre in mid-November.

Average retail petrol prices in Australia have now been above $1.90 per litre for 15 straight weeks, the longest stretch at this high level ever recorded. The previous record stretch above $1.90 per litre was 10 weeks above this level just over a year ago in May – July 2022.

Australian average retail petrol prices (cents per litre) weekly: 2021 – 2023

Source: Australian Institute of Petroleum (AIP) weekly reports:

Inflation Expectations increase in NSW, Victoria and Queensland in October, but down in WA

A look at Monthly Inflation Expectations on a State-based level shows increases in the larger States of NSW, Victoria and Queensland driving the overall monthly increase.

Inflation Expectations in NSW were up 0.2% points to 5.5% and above the national average. There were larger increases in Queensland, up 0.4% points to 5.6% and up 0.5% points to 5.8% in South Australia – now with the highest Inflation Expectations of any State for the first time since March 2023.

However, the largest increase was in Tasmania, up 0.8% points to 5.4% and now just above the national average of 5.3%.

In contrast to other States, Inflation Expectations in Western Australia decreased in October, down 0.1% points to 5.1% and are now level with Victoria also on 5.1% (up 0.1% points on a month ago). These two States now have lower Inflation Expectations than any other State.

Inflation Expectations in Country Areas increased for the first time since July, up 0.2% points to 5.4%, and just above the national average. Inflation Expectations in Capital Cities increased for the first time since June, up by 0.2% points to 5.3% in October.

Roy Morgan CEO Michele Levine says weekly Inflation Expectations were at 5.6% in mid-November, up from 5.3% in October and up from 4.9% in mid-September, after a surge in retail petrol prices which have now spent a record 15 straight weeks above $1.90 per litre:

Block Quote

“ANZ-Roy Morgan Inflation Expectations in Australia have increased in recent weeks and are now at 5.6% in mid-November, up from 5.3% for the month of October. Inflation Expectations had reached a weekly low of 4.9% in mid-September 2023 but have risen significantly over the last two months since then – up by 0.7% points in the last nine weeks.

“The recent increases in Inflation Expectations have followed weeks of high energy prices and average retail petrol prices have now been above $1.90 per litre for a record 15 straight weeks – averaging over $2 per litre since early August.

“The continuing high level of energy prices are generating inflationary pressures in the economy and are a key reason the RBA raised interest rates again in November after leaving rates unchanged for four straight months from June to September.

“The final RBA meeting on interest rates for the year is in two weeks’ time in early December and if the inflationary pressures in the economy continue to build the likelihood is that the RBA will raise interest rates for a second straight month to a 12-year high of 4.6%.

“Looking forward the key data release for the RBA to consider in the run-up to their final meeting of the year in December is the upcoming ABS October monthly CPI reading due to be released next week on November 29.

“The most recent ABS monthly CPI readings have increased from 4.9% in July 2023, increasing to 5.2% in August 2023, and 5.6% in September 2023 – consecutive monthly increases in the annual inflation figures for the first time this year and mirroring the increases we’ve seen in Inflation Expectations.”

See below for a comprehensive list of RBA interest rate changes during the time-period charted above.

The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source which has interviewed an average of around 5,000 Australians aged 14+ per month over the last decade from November 2013 – October 2023 and includes interviews with 7,495 Australians aged 14+ in October 2023.

For comments and information about Roy Morgan’s Inflation Expectations data, please contact:

Roy Morgan Enquiries
Office: +61 (3) 9224 5309

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) “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.

Monthly Roy Morgan Inflation Expectations Index (2010 – 2023)
YearJanFebMarAprMayJunJulAugSepOctNovDecYearly Average
20235.  5.4
Overall: Roy Morgan Inflation Expectations Average: 4.8

The Roy Morgan Consumer Confidence Report – Including Inflation Expectations

To learn more about the trends for Inflation Expectations as well as Consumer Confidence for different segments and demographics throughout the Australian community, purchase the Roy Morgan Consumer Confidence Monthly Report.

RBA interest rates changes during the time-period measured: 2010-2023.

RBA – Interest rate increasing cycle (2010):

April 2010: +0.25% to 4.25%; May 2010: +0.25% to 4.75%, November 2010: +0.25% to 5%.

RBA – Interest rate cutting cycle (2011-2013, 2015-2016 & 2019-2020):

2011 – 2013
November 2011: -0.25% to 4.5%; December 2011: -0.25% to 4.25%; May 2012: -0.5% to 3.75%;
June 2012: -0.25% to 3.5%; October 2012: -0.25% to 3.25%; December 2012: -0.25% to 3%;
May 2013: -0.25% to 2.75%; August 2013: -0.25% to 2.5%.

There were no RBA interest rate changes during 2014.

2015 – 2016
February 2015: -0.25% to 2.25%; May 2015: -0.25% to 2%; May 2016: -0.25% to 1.75%;
August 2016: -0.25% to 1.5%.

2017 – 2018
There were no RBA interest rate changes during 2017-18.

2019 – 2020
June 2019: -0.25% to 1.25%; July 2019: -0.25% to 1%; October 2019: -0.25% to 0.75%;
March 4, 2020: -0.25% to 0.5%, March 20, 2020: -0.25% to 0.25% & November 6, 2020: -0.15% to 0.1%.

RBA – Interest rate increasing cycle (2022-23):

May 2022: +0.25% to 0.35%, June 2022: +0.5% to 0.85%; July 2022: +0.5% to 1.35%;
August 2022: +0.5% to 1.85%; September 2022: +0.5% to 2.35%; October 2022: +0.25% to 2.6%; November 2022: +0.25% to 2.85% and December 2022: +0.25% to 3.1%.

February 2023: +0.25% to 3.35%; March 2023: +0.25% to 3.6%; May 2023: +0.25% to 3.85%;
June 2023: +0.25% to 4.10%; November 2023: +0.25% to 4.35%.

About Roy Morgan

Roy Morgan is Australia’s largest independent Australian research company, with offices in each state, as well as in the U.S. and U.K. A full-service research organisation, Roy Morgan has over 80 years’ experience 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
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