Inflation Expectations down 0.3% points to 5.6% in August
In August 2022 Australians expected inflation of 5.6% annually over the next two years, down 0.3% points from the eight-year high reached a month ago in July 2022.
Inflation Expectations in August are a large 1.3% points higher than a year ago in August 2021, and 2.4% points above the record low of 3.2% in August 2020.
Although Inflation Expectations have dropped in August the return of the full petrol excise at the end of September is likely to lead to higher inflation expectations in the next few months as the price of a litre of petrol will increase by over 25 cents per litre.
Inflation Expectations soar for L-NP supporters after the Federal Election
A look at Inflation Expectations by voting intention shows a contrasting story for supporters of the major parties since the Federal Election in late May.
Overall Inflation Expectations are slightly higher in the three months post the Federal Election at 5.7% (June – August 2022), up 0.2% points from the three months leading into the election (March – May 2022).
The increase has been driven by L-NP supporters. Inflation Expectations for L-NP supporters averaged 5.9% in the post-election period, up a large 1.1% points compared to the pre-election period (4.8%).
In contrast, the Inflation Expectations of ALP supporters and Greens supporters averaged 5.1% for the three months after the Federal Election down by 0.2% points compared to an average of 5.3% in the three months leading into the election.
Inflation Expectations by Voting Intention: March – May 2022 cf. June – August 2022
Source: Roy Morgan Single Source: March-May 2022, n=18,056; June-August 2022, n=19,498. Base: Australians 14+.
Inflation Expectations are highest in Western Australia and lowest in South Australia
On a State-based level Inflation Expectations were highest in Western Australia in August at 5.8%, slightly higher than both New South Wales and Queensland – both just above the national average at 5.7%
Inflation Expectations in Victoria and Tasmania were just below the national average at 5.5% while they were lowest of all in South Australia at 5.3%.
Inflation Expectations Index long-term trend – Expected Annual Inflation in next 2 years
Source: Roy Morgan Single Source: Interviewing an average of 4,700 Australians aged 14+ per month (April 2010-August 2022).
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 have moderated in August, down 0.3% points to 5.6%, but they still remain well above the long-term average of 4.7%:
“Inflation Expectations dropped 0.3% points to 5.6% in August, the first drop in the measure since the Federal Election in late May. Nevertheless, in the three months since the election Inflation Expectations have averaged 5.7%, up 0.2% points on the three months leading into the election.
“A look at Inflation Expectations by political party support shows where the increases have come from in the post-election period – supporters of the L-NP and Independents/ Other Parties.
“In the post-election period the Inflation Expectations of L-NP supporters are up 1.1% points compared to the pre-election period and are up by 0.6% points for those who support Independents/ Other Parties. In contrast since the Federal Election the Inflation Expectations of ALP supporters and Greens supporters are down by 0.2% points to 5.1%.
“These results illustrate the impact the government of the day can have on the Inflation Expectations of various constituents. Liberal and National Party supporters, who tend to be older, clearly associate an ALP Government with higher spending and higher inflation such as Australia experienced in the 1980s under the ALP Governments of Bob Hawke and Paul Keating.
“In contrast, ALP supporters and Greens supporters are more inclined to expect the new ALP Government, led by Prime Minister Anthony Albanese, will be able to bring inflationary pressures under control now that their preferred side of politics is in power.
“Looking again at the monthly figures, although the drop in Inflation Expectations in August is good news, it is likely to prove short-lived. We are only weeks away from the return of the full petrol excise which will see average petrol prices increase by over 25 cents per litre at the end of September.
“The increase to the fuel excise is set to ‘re-charge’ inflation with Treasury estimates suggesting the return of the excise will increase annual headline inflation by 0.25 of a percentage point.
“The RBA has now increased interest rates at five consecutive meetings by a total of 2.25% to lift the official cash rate to 2.35%. This is the fastest series of increases to interest rates for nearly 30 years since the RBA lifted interest rates by 2.75% across five meetings in late 1994.
“Following that cycle of interest rate increases it was around 18 months before the RBA cut interest rates in July 1996 following the election of the new Coalition Government.”
The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source which has interviewed an average of 4,700 Australians aged 14+ per month over the last decade from April 2010 – August 2022 and includes interviews with 6,069 Australians aged 14+ in August 2022.
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 up/ go down) on average during the next 2 years?”
3) “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.
| Monthly Roy Morgan Inflation Expectations Index (2010 – 2022) | |||||||||||||
| 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 | 4.5 | 4.3 | 4.2 | 4.4 |
| 2019 | 4.2 | 4.0 | 4.0 | 3.7 | 4.1 | 3.8 | 4.1 | 3.9 | 4.0 | 4.1 | 3.9 | 4.0 | 4.0 |
| 2020 | 3.9 | 4.0 | 4.0 | 3.6 | 3.3 | 3.2 | 3.4 | 3.2 | 3.3 | 3.5 | 3.4 | 3.6 | 3.5 |
| 2021 | 3.6 | 3.7 | 3.8 | 3.7 | 3.7 | 4.0 | 4.1 | 4.3 | 4.5 | 4.8 | 4.9 | 4.8 | 4.2 |
| 2022 | 4.9 | 5.1 | 5.8 | 5.5 | 5.3 | 5.7 | 5.9 | 5.6 | 5.5 | ||||
| Monthly Average |
4.7 | 4.7 | 4.8 | 4.8 | 4.7 | 4.8 | 4.8 | 4.7 | 4.7 | 4.7 | 4.6 | 4.7 | 4.8 |
| Overall Roy Morgan Inflation Expectations Average: 4.7 | |||||||||||||
RBA interest rates changes during the time-period measured: 2010-2022.
RBA – Interest rate increasing cycle (2010):
2010
April 2010: +0.25% to 4.25%; May 2010: +0.25% to 4.75%, November 2010: +0.25% to 5%.
RBA – Interest rate cutting cycle (2011-2013, 2015-2016 & 2019-2020):
2011
November 2011: -0.25% to 4.5%; December 2011: -0.25% to 4.25%.
2012
May 2012: -0.5% to 3.75%; June 2012: -0.25% to 3.5%; October 2012: -0.25% to 3.25%;
December 2012: -0.25% to 3%.
2013
May 2013: -0.25% to 2.75%; August 2013: -0.25% to 2.5%.
2014
There were no RBA interest rate changes during 2014.
2015
February 2015: -0.25% to 2.25%; May 2015: -0.25% to 2%.
2016
May 2016: -0.25% to 1.75%; August 2016: -0.25% to 1.5%.
2017
There were no RBA interest rate changes during 2017.
2018
There were no RBA interest rate changes during 2018.
2019
June 2019: -0.25% to 1.25%; July 2019: -0.25% to 1%; October 2019: -0.25% to 0.75%.
2020
March 4, 2020: -0.25% to 0.5%, March 20, 2020: -0.25% to 0.25% & November 6, 2020: -0.15% to 0.1%.
RBA – Interest rate increasing cycle (2022):
2022
May 2022: +0.25% to 0.35%, June 2022: +0.5% to 0.85%; July 2022: +0.5% to 1.35%; August 2022: +0.5% to 1.85%; September 2022: +0.5% to 2.35%.
For comments or more information please contact:
Roy Morgan - Enquiries
Office: +61 (03) 9224 5309
askroymorgan@roymorgan.com
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% | |
| 1,000 | ±3.0 | ±2.7 | ±1.9 | ±1.3 |
| 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 |
