Roy Morgan Research (RMR) has released its inflation expectations survey for August, which revealed that consumers’ inflation expectations over the next two years fell by 0.2% to 4.8% per year in August – 0.2% down from a year ago and the lowest result recorded so far in 2014:
According to the media release:
Analysis by State shows inflation expectations were driven lower by falls in five out of the six Australian States: New South Wales (5.0%, down 0.3%), Queensland (4.9%, down 0.1%), Western Australia (5.3%, down 0.4%), South Australia (4.3%, down 0.7%) and Tasmania (4.3%, down 0.5%). Inflation expectations are now clearly the lowest in South Australia and Tasmania. However, inflation expectations increased in Victoria (4.6%, up 0.1%).
The 4.8% print over the next two years infers inflation of only 2.4% per annum, which is well within the RBA’s inflation target of 2% to 3% over the medium-term, and suggests the RBA will be in no rush to raise interest rates, and indeed has scope to cut if needed.
