In April Australians expected inflation of 3.7% annually over the next two years, down only 0.1% points on March, although this is the first time since June 2018 that Inflation Expectations are now higher than they were a year ago. Inflation Expectations in April 2020 were at 3.6%.
Inflation Expectations are now 1% point below their long-term average of 4.7% but have increased by 0.5% points since reaching a record low of only 3.2% in August 2020.
Inflation Expectations are heavily influenced by someone’s employment status and unemployed Australians consistently have higher Inflation Expectations than people who are employed or not in the workforce.
Unemployed Australians had Inflation Expectations of 4.5% in April, an increase of 0.4% points since August 2020 when the measure hit a record low.
This is far higher than Australians employed either part-time on 3.9% (up 0.5% points) or full-time on 3.4% (up 0.8% points). Interestingly, Australians who are employed part-time but want more work, the under-employed, have Inflation Expectations of 4.4% (up 0.8% points) – almost as high as the unemployed.
Those Australians not in the workforce who may be retired, on home duties, studying or not working and not looking for work have Inflation Expectations of 4.1% - right in the middle of the employed and unemployed.
Inflation Expectations by Employment Status: August 2020 cf. April 2021
Source: Roy Morgan Single Source: April 2021, n=7,416. Base: Australians aged 14+.
Inflation Expectations are again highest in Tasmania and are now lowest in Queensland
On a State-based level Inflation Expectations are again highest in Tasmania at 4.4%, although this is down 0.2% points from March. The measure has ‘run hot’ in Australia’s smallest State and been higher than any other State in every month so far this year.
Last week Tasmanians went to the polls and re-elected the Tasmanian Liberal Government now led by Premier Peter Gutwein for an unprecedented third term. This is the first time in Tasmania’s history the Liberal Party has won three State Elections in a row.
Inflation Expectations are now slightly higher than the national average in NSW at 4% (up 0.4% points from March), WA at 3.8% (down 0.2% points) and SA at 3.8% (up 0.5% points).
Victorian Inflation Expectations are again in line with the national average at 3.7% in April, down 0.1% points from March while Queensland has the lowest Inflation Expectations at 3.5%, down by 0.8% points.
The ANZ-Roy Morgan Consumer Confidence Rating has continued to recover and was at 112.1 for the month of April 2021, an increase of 23pts (+25.8%) since August 2020.
Consumer Confidence for April was the highest monthly figure for the rating since the month of September 2019 (112.8) more than a year ago.
Inflation Expectations Index long-term trend – Expected Annual Inflation in next 2 years
Source: Roy Morgan Single Source: Interviewing an average of 4,500 Australians aged 14+ per month (April 2010 – April 2021).
See below for a comprehensive list of RBA interest rate changes during the time-period charted above.
Roy Morgan CEO Michele Levine says Inflation Expectations moderated in April, down slightly to 3.7%, but are far higher for unemployed (4.5%) and under-employed (4.4%) Australians: