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Inflation Expectations unchanged for a third straight month in September

Source: Roy Morgan Single Source: Interviews with an average of 4,000 Australians per month aged 14+ (April 2010 – September 2018).
In September Australians expected inflation of 4.3% per year over the next two years. This is unchanged for the third straight month, but down 0.1% from a year ago in September 2017. Inflation Expectations have now tracked in a narrow range between 4.3-4.5% for 15 straight months since July 2017.

Analysing Inflation Expectations by generation compared to a year ago shows Inflation Expectations down for three generations including Millennials, Gen Z and Pre-Boomers born before 1946, unchanged for Baby Boomers and up significantly for Generation X. See below for analysis of these results in more detail.

Inflation Expectations remain well below the eight year average of 5.0%. September Inflation Expectations are based on a nationwide face-to-face survey of 4,304 Australians aged 14+.

Roy Morgan Inflation Expectations Index – Expected Annual Inflation in next 2 years

Source: Roy Morgan Single Source: Interviews with an average of 4,000 Australians per month aged 14+ (April 2010 – September 2018).

Inflation Expectations now highest in Tasmania and now lowest in NSW

Analysis of Inflation Expectations by State shows Inflation Expectations were up in Tasmania to 5.2%, now the highest of any State, and up in Western Australia to 4.2%.

In contrast Inflation Expectations fell in NSW to 4.1%, now the lowest of any State, and were also down in both Queensland and South Australia to 4.3%. Inflation Expectations were unchanged at 4.4% in Victoria. 

Inflation Expectations up for L-NP supporters but still the lowest in September

Inflation Expectations for L-NP supporters were up 0.3% to 3.8% in September but are still well below supporters of all other parties. In contrast Inflation Expectations for ALP supporters are unchanged at 4.2% and remain just below the national average.

Supporters of Independents/Others again have the highest Inflation Expectations of any supporters despite falling 0.3% to 4.6% while Greens supporters’ Inflation Expectations were up 0.3% to 4.1%.

Inflation Expectations down generally but up for Generation X

Analysing Inflation Expectations in Australia shows small falls across most generations over the past year in line with lower overall Inflation Expectations in Australia – now 4.3%, down 0.1% from a year ago.

Inflation Expectations for the youngest generation, Generation Z, have decreased the most over the last year, down 0.4% to 4.2%, and are now level with the Inflation Expectations of their slightly older counterparts the Millennials, down 0.1% to 4.2%.

Also decreasing over the past year are the Inflation Expectations of the oldest Australians in the Pre-Boomer Generation (born before 1946) now down 0.3% to 4.1%. Pre-Boomers now share the lowest Inflation Expectations of any generation with Baby Boomers who are unchanged on 4.1%.

In contrast to the other four generations there is one generation which has seen a significant increase in Inflation Expectations from a year ago – Generation X.

The middle-aged generation comprises Australians born between 1961-75 (now aged 42-57 years old) and now has significantly higher Inflation Expectations than any other generation, up by 0.3% to 4.6%.

Inflation Expectations by Generation September 2017 cf. September 2018

Source: Roy Morgan Single Source: September 2017, n=4,325 and September 2018, n=4,304. Base: Australians 14+. 

Michele Levine, CEO, Roy Morgan, says overall Inflation Expectations in Australia have been remarkably stable over the past 15 months between 4.3-4.5% although the headline figure hides divergent trends among different generations and age groups:

“Roy Morgan Inflation Expectations are unchanged for the third straight month at 4.3% in September but down 0.1% on a year ago. Inflation Expectations have now been stuck in a narrow band between 4.2-4.5% for nearly two years, or 22 months, since December 2016.

“Although overall Inflation Expectations have been incredibly stable compared to historical precedents, analysing Inflation Expectations of different generations beneath the headline figure shows Inflation Expectations have been dropping for younger Australians whilst they have increased significantly for middle-aged Australians.

“Inflation Expectations for Millennials (born 1976-1990) and Generation Z (born 1991-2005) have both dropped over the past year to 4.2% - now below the national average. This is significant as in previous years (2010-2017) younger Australians have consistently had higher Inflation Expectations than their older peers as we noted a year ago in September 2017.

“In contrast, it is middle-aged Australians born in the years 1961-1975 and now aged 42-57 years old in Generation X, who now have the highest Inflation Expectations of any generation at 4.6%, up 0.3% on a year ago. Generation X is the only generation to have higher Inflation Expectations in September compared to this time last year.

“As we have seen previously when analysing Inflation Expectations by age groups it is the older Australians in the Baby Boomer and Pre-Boomer generations that generally have the lowest Inflation Expectations of any generation, now at only 4.1% for both generations.

“Contact Roy Morgan today to learn more about how your consumers and customers are tracking.”

This face-to-face research on Australian inflation expectations was conducted during the month of September 2018 with an Australia-wide cross-section of 4,304 Australians aged 14+.

Monthly Roy Morgan Inflation Expectations Index (2010 – 2018)

Year

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Yearly

Average

2010

n/a

n/a

n/a

5.9

5.8

5.5

5.6

5.4

5.5

5.8

5.6

5.8

5.7

2011

6.6

6.4

6.4

6.2

6.1

6.2

6.1

5.8

5.7

5.8

5.5

5.5

6.0

2012

5.4

5.5

5.9

5.9

6.0

6.2

5.9

5.9

5.8

5.7

5.6

5.4

5.8

2013

5.2

5.1

5.3

4.9

5.2

4.9

5.3

5.0

4.8

4.9

4.8

5.0

5.0

2014

5.1

5.2

5.2

5.1

5.1

5.3

5.0

4.8

5.0

4.8

4.9

4.4

5.0

2015

4.4

4.3

4.5

4.5

4.2

4.4

4.4

4.5

4.5

4.2

4.4

4.5

4.5

2016

4.3

4.2

4.2

4.2

4.0

4.0

4.1

3.9

4.1

4.1

3.9

4.2

4.1

2017

4.5

4.4

4.4

4.4

4.3

4.2

4.3

4.5

4.4

4.5

4.5

4.5

4.4

2018

4.5

4.4

4.3

4.5

4.3

4.5

4.3

4.3

4.3

4.4

Monthly
Average

5.0

4.9

5.0

5.1

5.0

5.0

5.0

4.9

4.9

5.0

4.9

4.9

5.0

Overall Roy Morgan Inflation Expectations Average: 5.0


The questions used to calculate the Monthly Roy Morgan Inflation Expectations Index.

1) Prices.

“During the next 2 years, do you think that prices in general will go up, or go down, or stay where they are now?”

2a) If stay where they are now.

“Do you mean that prices will go up at the same rate as now or that prices in general will not go up during the next 2 years?

2b) If go up or go down.

“By about what per cent per year do you expect prices to (go upgo downon average during the next 2 years?”

3) If respondent says more than 5%.

“Would that be (x%) per year, or is that the total for prices over the next 2 years?”

The Roy Morgan Inflation Expectations Index is a forward looking indicator unlike the Consumer Price Index (CPI) and is based on continuous (weekly) measurement, and monthly reporting. The Roy Morgan Inflation Expectations Index is current and relevant.


For comments or more information please contact:
Roy Morgan - Enquiries
Office: (+61) (03) 9224 5309
askroymorgan@roymorgan.com


About Roy Morgan

Roy Morgan is the largest independent Australian research company, with offices throughout Australia, as well as in Indonesia, the United States and the United Kingdom. A full service research organisation specialising in omnibus and syndicated data, Roy Morgan has over 70 years’ experience in collecting objective, independent information on consumers.

Margin of Error

The margin of error to be allowed for in any estimate depends mainly on the number of interviews on which it is based. Margin of error gives indications of the likely range within which estimates would be 95% likely to fall, expressed as the number of percentage points above or below the actual estimate. Allowance for design effects (such as stratification and weighting) should be made as appropriate.

Sample Size

Percentage Estimate

40%-60%

25% or 75%

10% or 90%

5% or 95%

5,000

±1.4

±1.2

±0.8

±0.6

7,500

±1.1

±1.0

±0.7

±0.5

10,000

±1.0

±0.9

±0.6

±0.4

20,000

±0.7

±0.6

±0.4

±0.3

50,000

±0.4

±0.4

±0.3

±0.2