Roy Morgan has released inflations expectations for November, which has reached a seven year high:
In November 2021 Australians expected inflation of 4.9% annually over the next two years, up 0.1% points, and the highest Inflation Expectations for seven years since November 2014.
Inflation Expectations are now 0.2% points above the long-term average of 4.7% and are now a large 1.5% points higher than a year ago in November 2020 (3.4%) – the largest year-over-year increase in the index in the history of the series.
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Inflation Expectations for Country Areas are over 0.5% points higher than for Capital Cities
A look at Inflation Expectations by Area shows a significant difference between how people in Capital Cities and Country Areas regard future price movements. Inflation Expectations are higher in the Country Areas of Australia’s four largest States compared to the respective Capital Cities.
Australians living in Capital Cities, almost two-thirds of Australia’s overall population, expect inflation of 4.7% annually over the next two years (up 1.6% points from the low of 3.1% reached in June 2020) while those living in Country Areas expect far higher inflation, at 5.3% (up 2.1% points from June 2020)…
On a State-based level Inflation Expectations are highest in Tasmania at 5.6% and also well above the national average in Queensland at 5.2%, a State with more people living in regional areas than the capital city of Brisbane.
Inflation Expectations are more in line with the national average of 4.9% in Victoria (5.1%), NSW (4.9%) and Western Australia (4.8%).
The outlier this month is South Australia which has the lowest Inflation Expectations of only 4.4%. South Australia is the first State that has had strict domestic border controls to fully re-open to those States which have had large outbreaks of the ‘Delta variant’ – NSW and Victoria…
Roy Morgan CEO Michele Levine says Inflation Expectations have continued to increase in Australia and now up for an unprecedented sixth month in a row, up 0.1% points to 4.9%:
“Inflation Expectations have increased rapidly over the last year and are now up 1.7% points since August 2020 (15 months ago) – increasing at a rate faster than 0.1% points per month. This is the largest cycle of increases in the history of the index, easily beating an increase of 1.2% points during the ‘Mining Boom’ in 2010-11 (from 5.4% in August 2010 to 6.6% in January 2011).
“Inflation Expectations are now at their highest for seven years since November 2014 (4.9%) and there is every reason to expect the measure will continue to increase over the next few months as energy prices remain elevated and there are continuing issues with supply chains worldwide.
“One of the most visible signs of inflationary pressures is the price of petrol at the pump…”
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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