Inflation expectations continue to plummet

From Roy Morgan Research:

In June, Australians expected annual inflation of 3.8% over the next two years as the RBA cut interest rates to a record low 1.25% in the first week of June. This is down 0.3% on May and down a significant 0.7% on a year ago in June 2018.

Inflation Expectations have decreased around Australia in June, and are down compared to a year ago, led by declines for both employed and unemployed Australians as well as across different occupations and employment categories.

Inflation Expectations fell in June as the RBA commenced an interest rate cutting cycle. The RBA’s decision to cut interest rates in June was the first cut announced by Australia’s central bank since a similar cut nearly three years ago in August 2016.
Inflation Expectations in June are based on personally interviewing a nationwide representative sample of 3,984 Australians aged 14+ face-to -face in their own homes…

Inflation Expectations driven lower by self-employed and skilled/unskilled workers

Analysing Inflation Expectations in Australia shows falls across the board for different occupation types and employment categories over the past year however the biggest falls have been for the self-employed and for skilled/unskilled workers.

Inflation Expectations for employed Australians for June 2019 dropped to only 3.6%, down 0.7% on a year ago. Inflation Expectations also declined for Australians that are not employed – including retired Australians, students, those on home duties, those choosing not to work and the unemployed – down by 0.6% to 4.2%.

Analysing Inflation Expectations by employment category shows that Inflation Expectations for self-employed Australians dropped significantly, down 1.4% to only 3.1% and now the lowest of any occupation or employment category measured.

Inflation Expectations also fell for Australians in public sector employment by 0.5% to 3.4% in June 2019 and for Australians in the private sector by 0.7% to 3.7% compared to a year ago.

Analysing Inflation Expectations by occupation type shows Inflation Expectations for skilled Australians fell by 1.2% to 3.5% over the last year and were down 1.2% to 3.9% for semi/unskilled Australians…

Full report here.

Comments

    • Low inflation expectation is an extremely negative economic indicator for a debt overwhelmed economy because there is no inflation eating away the principal

      the best time to get into a debt is when inflation (and IRs) are super high

      • Man I wish some Boomers would understand this… Rah Rah rah 17% interest rates, can you imagine they ask me? I say yeah.. and $150k mortgages woop dee doo.. lol..

      • it’s not only that mortgages would be much lower but when inflation is running at 15% one can pay off the house in 5-10 years by paying the same percentage of income
        so in 3 years one can buy 4 houses by paying the same portion of the income

      • Inflation doesn’t magically eat the principal. The principal remains unchanged. The muppet economists reckon that inflation causes high levels of employment, so they say inflation expectations are a positive economic indicator. The truth is that confidence is higher in an economy where people anticipate prices going down every year (which would happen in a healthy economy – it’s called increased productivity), but try explaining that to someone who’s had a neo-classical lobotomy.

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