Inflation Expectations down 0.2% points to 5.4% in September – before the petrol excise returned in full
In September 2022 Australians expected inflation of 5.4% annually over the next two years, down 0.2% points from August, and before the petrol excise was returned in full at the end of September.
Inflation Expectations in September are 0.9% points higher than a year ago in September 2021, and 2.2% points above the record low of 3.2% reached just over two years ago in June 2020.
Although Inflation Expectations have dropped for a second straight month the return of the full petrol excise at the end of September is set to lead to higher inflation expectations going forward. The latest figures show the average price of petrol has already increased by around 20 cents per litre in early October.
Inflation Expectations are up the most for unemployed people since the record low in June 2020
A deeper look at Inflation Expectations by employment status shows the largest increase has been for people who are unemployed, up 2.6% points to 6.4% since the measure reached a record low in June 2020. This is clearly the highest Inflation Expectations of any of the main employment categories reported.
The second highest Inflation Expectations are for those people who are under-employed, employed part-time but wanting more work, up 2% points to 5.8% since June 2020.
There have also been large increases in Inflation Expectations for people employed, up 2.4% points to 5.3%, and those employed full-time, up 2.4% points to 5.2%. However, this is still the lowest level of Inflation Expectations of any of the reported categories – more than 1% points lower than the unemployed.
Inflation Expectations by Employment Status: September 2022 cf. August 2020
Source: Roy Morgan Single Source: June 2020, n=5,767; September 2022, n=5,938. Base: Australians 14+.
Inflation Expectations are highest in NSW and Tasmania and again lowest in South Australia
On a State-based level Inflation Expectations were highest in New South Wales at 5.8% and Tasmania at 5.6%. Inflation Expectations were in line with the national average in Queensland at 5.4%.
Inflation Expectations in Victoria and Western Australia were just below the national average at 5.2% while they were again lowest of all in South Australia at 4.8%.
Inflation Expectations Index long-term trend – Expected Annual Inflation in next 2 years
Source: Roy Morgan Single Source: Interviewing an average of 4,700 Australians aged 14+ per month (April 2010-Sept. 2022).
See below for a comprehensive list of RBA interest rate changes during the time-period charted above.
Roy Morgan CEO Michele Levine says Inflation Expectations have ‘see-sawed’ so far during 2022 with increases in four months matched by decreases in four months as the index has oscillated between a low of 4.9% (January 2022) and a high of 5.9% (July 2022):
“Inflation Expectations dropped 0.2% points to 5.4% in September, continuing a trend so far this year of ‘two months up and two months down’ which has now persisted for eight straight months.
“The ‘see-sawing’ trend illustrates the different forces working on the economy and the level of Inflation Expectations has closely tracked the rise and fall in the price of petrol so far this year. The average metropolitan price of petrol has peaked in both March ($2.14) and July ($2.13) – the two months Inflation Expectations have peaked – at 5.8% in March and 5.9% in July.
“After these two high-priced peaks average petrol prices have subsequently plunged by over 50 cents per litre to average metropolitan prices of $1.62 per litre in April and only $1.61 per litre in September – and Inflation Expectations have also declined substantially.
“Since the average petrol price bottomed in mid-September the return of the full petrol excise at the end of the month has seen the price rise by over 20 cents per litre in recent weeks. The early indications are that Inflation Expectations have also begun to increase in October.
“Looking forward, later this month Treasurer Jim Chalmers will deliver his first Federal Budget and the figures for Inflation Expectations show they have increased significantly since bottoming at only 3.2% in June 2020 – up by over 2% points for all main employment categories.
“Unemployed Australians are expecting the highest level of inflation over the next two years at 6.4% – a full 1% point higher than the average Australian (5.4%). The task for the new Treasurer will be to reduce inflationary pressures in the economy which in turn will allow the RBA to stop increasing interest rates – which have now increased by a total of 2.5% points this year.
“Official interest rates in Australia are now at 2.6%, the highest they have been for over nine years since August 2013 (2.75%) and set to go higher still in the next few months. However, despite the fast pace of increases this year official interest rates are still significantly below the long-term average of just over 4.1% since the RBA gained its independence in 1992.
“Although there are significant challenges facing the Australian economy the latest ARA-Roy Morgan pre-Christmas spending forecasts show Australians are predicted to spend a record $63.9 billion during the run-up to Christmas, up 3% points on a year ago. The spending forecasts indicate there is still an underlying strength in the economy that continues despite rising inflation and interest rates.”
The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source which has interviewed an average of 4,700 Australians aged 14+ per month over the last decade from April 2010 – September 2022 and includes interviews with 6,069 Australians aged 14+ in September 2022.
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 – 2022) | |||||||||||||
| 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 | 4.3 | 4.2 | 4.4 |
| 2019 | 4.2 | 4.0 | 4.0 | 3.7 | 4.1 | 3.8 | 4.1 | 3.9 | 4.0 | 4.1 | 3.9 | 4.0 | 4.0 |
| 2020 | 3.9 | 4.0 | 4.0 | 3.6 | 3.3 | 3.2 | 3.4 | 3.2 | 3.3 | 3.5 | 3.4 | 3.6 | 3.5 |
| 2021 | 3.6 | 3.7 | 3.8 | 3.7 | 3.7 | 4.0 | 4.1 | 4.3 | 4.5 | 4.8 | 4.9 | 4.8 | 4.2 |
| 2022 | 4.9 | 5.1 | 5.8 | 5.5 | 5.3 | 5.7 | 5.9 | 5.6 | 5.4 | 5.5 | |||
| Monthly Average |
4.7 | 4.7 | 4.8 | 4.8 | 4.7 | 4.8 | 4.8 | 4.7 | 4.7 | 4.7 | 4.6 | 4.7 | 4.8 |
| Overall Roy Morgan Inflation Expectations Average: 4.7 | |||||||||||||
RBA interest rates changes during the time-period measured: 2010-2022.
RBA – Interest rate increasing cycle (2010):
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
November 2011: -0.25% to 4.5%; December 2011: -0.25% to 4.25%.
2012
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%.
2013
May 2013: -0.25% to 2.75%; August 2013: -0.25% to 2.5%.
2014
There were no RBA interest rate changes during 2014.
2015
February 2015: -0.25% to 2.25%; May 2015: -0.25% to 2%.
2016
May 2016: -0.25% to 1.75%; August 2016: -0.25% to 1.5%.
2017
There were no RBA interest rate changes during 2017.
2018
There were no RBA interest rate changes during 2018.
2019
June 2019: -0.25% to 1.25%; July 2019: -0.25% to 1%; October 2019: -0.25% to 0.75%.
2020
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):
2022
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%.
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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.
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.
