In December Australians expected inflation of 3.6% annually over the next two years, up 0.2% points from November and up 0.4% points on the record low in August. Inflation Expectations are now at their highest since the very beginning of the COVID-19 pandemic in April 2020.
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Inflation Expectations have increased sharply since hitting the record low in August and a look at different occupation and employment categories shows increases across the spectrum.
Australians who aren’t employed (retired, home duties, students and unemployed) have higher Inflation Expectations at 4% than those who are employed (3.4%), but the gap has narrowed since August.
For those who are employed it is Skilled workers who now have the highest Inflation Expectations at 3.9% – and the biggest increase (+0.9% points) since August. Inflation Expectations for White Collar workers (3.8%) and Semi/Unskilled workers (3.7%) are both above the national average while it is Professionals/Managers who have the lowest at 3% – although all are up significantly since August.
A look at Inflation Expectations by employment category also tells a story with self-employed Australians having easily the highest at 3.7% – up a full 1% point in only four months. People in Private Industry have Inflation Expectations of 3.4% (up 0.4% points since August) and those in Public Service have lower still at 3.3% (up 0.6% points).
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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