In August Australians expected inflation of 3.2% annually over the next two years, down 0.2% points on July and equalling the record low in June. Inflation Expectations are now down a significant 0.7% points on a year ago.
The big economic impact in August was the imposition of a hard lockdown in Melbourne including a night-time curfew, stringent limits on travel and the compulsory wearing of masks. There were also repeated low-level outbreaks of COVID-19 in both New South Wales and Queensland throughout the month.
The impact of lockdowns and ongoing restrictions on activities around Australia is having an increasing impact on the employment market which must also deal with reductions in the JobKeeper wage subsidy and the JobSeeker coronavirus supplement at the end of September.
Inflation Expectations have fallen for all employment categories across the board. Those for full-time employees have fallen the most since March (pre COVID-19), down by 0.9% to only 2.6% annually over the next two years - clearly the lowest of any employment category.
In August unemployed Australians again have the highest inflation expectations of 4.1% annually over the next two years, but this is still down by 0.7% since March. People who are employed part-time but looking for more work, the under-employed, expect higher than average inflation of 3.6% (down 0.7% since March).
Australians who are not in the workforce at all, whether retired, on home duties, studying, or simply not working, have higher than average inflation expectations of 3.7%, down a significant 0.8% since March.
Inflation Expectations by Employment Status March 2020 (pre COVID-19) cf. August 2020
Source: Roy Morgan Single Source: March 2020, n=6,255 and August 2020, n=6,119. Base: Australians aged 14+.
Roy Morgan CEO Michele Levine says Inflation Expectations dropped to an equal record low of only 3.2% in August as the second wave of COVID-19 forced Victoria into a hard lockdown and led to further restrictions in both New South Wales and Queensland: