Aussie inflation expectations have rocketed ahead of tomorrow’s March quarter CPI release by the Australian Bureau of Statistics (ABS).
According to Roy Morgan, inflation expectations over the next two years soared by 0.7% to 5.8% in March to its highest level in almost a decade (September 2012):
There are 880 words left in this subscriber-only article.
Get your first month for $1
The increase in March was the biggest monthly jump in the index since Inflation Expectations increased by a record 0.8% points in January 2011 to a record high of 6.6% during the middle of the then ‘Mining Boom’. Inflation Expectations are now 1.1% points above the long-term average of 4.7% and a large 2% points higher than a year ago in March 2021 (3.8%).
The steep rise in Inflation Expectations in March came as the average Australian petrol price hit a record high of $2.13 per litre in the week to Sunday March 201 before a halving in the petrol excise, and lowering international oil prices, sent the price plunging over the next four weeks…
Inflation Expectations have been consistently higher in Country Areas than Capital Cities since bottoming in mid-2020 during the early stages of the pandemic and that trend continues in the early months of 2022 as the index has soared.
On a State-based level Inflation Expectations were highest in Tasmania at 6.2%. Inflation Expectations were slightly higher than the national average at 5.9% in NSW, Queensland and South Australia.
Inflation Expectations were in line with the national average in Victoria (5.8%) and slightly below the national average in Western Australia (5.7%).
This data obviously pre-dates the 22 cent cut in fuel excise, which lowered petrol prices over April.
All eyes are now on tomorrow’s CPI release. If it comes in hot, it could potentially lead the RBA to hike rates in May; although I think it would wait until after the federal election once the latest wages and national accounts data on 18 May and 1 June respectively have been received.