Inflation Expectations up 0.9% points to 6.5% in November – the highest since January 2011
In November 2022 Australians expected inflation of 6.5% annually over the next two years, up 0.9% points from October. The spike in Inflation Expectations followed the return of the 25 cents per litre petrol excise at the end of September.
Inflation Expectations in November are 1.6% points higher than a year ago in November 2021, and more than double the record low of 3.2% reached just over two years ago in August 2020.
Inflation Expectations have increased for a second straight month and hit their highest level since January 2011 when the measure reached a record high of 6.6%. The reading of 6.5% for November looks to be the high point for the indicator this year as Inflation Expectations have dropped in recent weeks.
Inflation Expectations soar during the last two years and are highest for renters
A deeper look at Inflation Expectations by home ownership status shows large increases across the different home ownership categories over the last two years.
Overall Inflation Expectations have increased from 3.4% in November 2020 to 4.9% a year ago (+1.5%) and now 6.5%, up 1.6% points from a year ago and up 3.1% points from two years ago.
The Inflation Expectations of renters are highest at 6.8% in November, up 1.7% points from a year ago and up 3.2% points from November 2020.
People who own their own home have almost as high Inflation Expectations at 6.7%, up 3.3% points from two years ago, while it is those paying off their home who have the lowest Inflation Expectations at 6.1%, but this is still up by 3% points from two years ago.
Inflation Expectations by Home Ownership Status: Nov. 2020 cf. Nov. 2021 cf. Nov. 2022
Source: Roy Morgan Single Source: November 2020, n=6,082; November 2021, n=5,994; November 2022, n=5,960. Base: Australians 14+.
Inflation Expectations are highest in Queensland and NSW and lowest in Tasmania
On a State-based level Inflation Expectations were highest in Queensland at 6.8% followed by New South Wales at 6.6%. Inflation Expectations were in line with the national average in both Victoria and South Australia at 6.5%.
Inflation Expectations in Western Australia were just below the national average at 6.4% while they were clearly lowest of all in Tasmania at 5.7%. Inflation Expectations in all States were up on a month ago.
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-Nov. 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 jumped by a record 0.9% points in November to hit 6.5% - their highest level in over a decade since January 2011 (6.6%):
“Inflation Expectations soared in the month of November, up 0.9% points to 6.5%, the largest monthly jump ever recorded in the history of the index. Inflation Expectations have followed a pattern all year of ‘two months up and two months’ down which has now persisted for ten straight months.
“The sharp rise in Inflation Expectations followed the return of the petrol excise in early October, which added around 25 cents per litre to the cost of petrol, and extreme weather events in NSW and Victoria that have led to extensive flooding that has lifted the price of many food and grocery products. Petrol prices peaked in mid-November at $1.99 per litre. (See below for a chart tracking Inflation Expectations vs. Average retail petrol prices during 2022).
“Although Inflation Expectations spiked in November, the early indications are that they have softened again in December as petrol prices have retreated from their mid-November peak.
“A look at Inflation Expectations by home ownership status shows the measure has increased substantially over the last two years for all of the three main categories. Renters have the highest Inflation Expectations at 6.8%, up 1.7% points in a year and up 3.2% points since November 2020.
“Just behind are people who own their home with Inflation Expectations of 6.7%, almost double the level of two years ago of 3.4% in November 2020. People who are paying off their home have Inflation Expectations of 6.1%, but this is still up 3% points over the last two years.
“Although these are the highest Inflation Expectations Australians have held for over a decade since the peak of the mining boom in 2011, they are now below the latest ABS CPI figure for the year to September 2022 of 7.3%.
“The rising level of inflation this year has led the RBA to increase official interest rates by a total of 3% points to 3.1% since their first increase in early May. This is the highest interest rates have been for over a decade since November 2012. However, despite the increases official interest rates are still below the long-term average of just over 4.1% since the RBA gained its independence in 1992.
“Although there are significant challenges facing the Australian economy the latest ARA-Roy Morgan pre-Christmas spending forecasts show Australians are predicted to spend a record $66 billion during the run-up to Christmas, up 6.4% points on a year ago.
“The strength of the Australian economy has been illustrated over the last few months with record retail spending in September and October of over $35 billion causing the initial forecasts for Christmas spending to be upgraded by over $2 billion.”
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 – November 2022 and includes interviews with 5,960 Australians aged 14+ in November 2022.
Inflation Expectations vs. Average retail petrol prices: January – November 2022
Source: Roy Morgan Single Source: January 2022 – November 2022. Average interviews per month: n=6,278. Patrol prices: Australian Institute of Petroleum (Weekly Price Reports): http://www.aip.com.au/pricing/weekly-prices-reports
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 | 5.4 | 5.6 | 6.5 | 5.6 | |
| Monthly Average |
4.7 | 4.7 | 4.8 | 4.8 | 4.7 | 4.8 | 4.8 | 4.7 | 4.7 | 4.8 | 4.8 | 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%; October 2022: +0.25% to 2.6%.; November 2022: +0.25% to 2.85% and December 2022: +0.25% to 3.1%.
For comments and information about Roy Morgan’s Inflation Expectations data, please contact:
Roy Morgan Enquiries
Office: +61 (3) 9224 5309
askroymorgan@roymorgan.com
The Roy Morgan Consumer Confidence Report – Including Inflation Expectations
To learn more about the trends for Inflation Expectations as well as Consumer Confidence for different segments and demographics throughout the Australian community, purchase the Roy Morgan Consumer Confidence Monthly Report.
About Roy Morgan
Roy Morgan is Australia’s largest independent Australian research company, with offices in each state, as well as in the U.S. and U.K. A full-service research organisation, Roy Morgan has over 80 years’ experience 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% | |
| 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 |
