Inflation Expectations dropped 0.3% points to 5.3% in April 2023
In April 2023 Australians expected inflation of 5.3% annually over the next two years, down 0.3% points from March 2023. The monthly decrease in Inflation Expectations came before the RBA decided to increase interest rates in early May and before last week’s Federal Budget.
The monthly decrease in April has been sustained in the first two weeks of May with weekly Inflation Expectations still at 5.3% in mid-May and averaging 5.3% over the last eight weeks since late March.
Looking longer-term, Inflation Expectations have averaged 5.4% so far during 2023 down from a monthly high of 6.5% in November 2022 and a weekly high of 6.8% in early November.
The latest information on weekly Inflation Expectations is available to view each week in the Roy Morgan Weekly Update video on YouTube.
The fall in Inflation Expectations during 2023 has been followed by the official ABS CPI figures which fell to 7.0% in the March Quarter 2023 down from a 30-year high of 7.8% in the December Quarter 2022.
Inflation Expectations Index long-term trend – Expected Annual Inflation in next 2 years
Source: Roy Morgan Single Source: Interviewing an average of 4,800 Australians aged 14+ per month (April 2010-Apr. 2023).
Inflation Expectations were up in the decentralised States of Queensland and Tasmania in April
A look at Inflation Expectations on a State-based level shows Inflation Expectations declining in most States in April, however the trend was bucked in Queensland and Tasmania – which both increased.
Inflation Expectations in Queensland were up for a third straight month, up 0.1% points to 5.8%, and are now the highest of any State for the first time this year. Tasmania was the other State to experience rising Inflation Expectations in April, up by 0.2% points to 5.5%.
A key factor to take account of is that Queensland and Tasmania are the two most decentralised States in Australia with the majority of the population living outside the respective Capital Cities.
In line with the movements in Queensland and Tasmania it is Country Areas which continue to have clearly higher Inflation Expectations at 5.7% in April (down 0.1% points) compared to only 5.1% in Capital Cities, down 0.3% points from March.
Inflation Expectations in other States were down in April including New South Wales at 5.5% (down 0.2% points), South Australia at 5.2% (down 0.7% points), Victoria at 5.0% (down 0.3% points) and lowest of all for the fifth straight month in Western Australia at 4.9% (down 0.2% points).
Roy Morgan CEO Michele Levine says Inflation Expectations fell in April by 0.3% points to 5.3% - and have maintained that level in recent weeks as the RBA hiked interest rates and the Albanese Government delivered its first full Federal Budget last week:
“Inflation Expectations in Australia have been remarkably stable in recent weeks after a brief rise in early March, the measure declined by 0.3% points to 5.3% for the month of April. Inflation Expectations have now averaged 5.3% for the last eight weeks since late March and the latest weekly measure is remains at 5.3% in mid-May.
“In recent years we’ve seen Inflation Expectations play a key role as a leading indicator of the official ABS inflation. These results add to evidence that Inflation Expectations peaked in early November at 6.8% and have sustainably fallen to a lower level since then. This view aligns with commentary provided by the RBA and is also supported by the latest ABS CPI figures for March 2023.
“The ABS CPI figures for December Quarter 2022 peaked at a 30-year high of 7.8% and fell significantly, to 7.0%, for the March Quarter 2023 – once again following the trend outlined in advance by the ANZ-Roy Morgan Inflation Expectations index. The latest ABS monthly CPI figures are now at 6.3% in the year to March 2023 after hitting a high of 8.4% in November 2022.
“Interestingly, there is a key split that persists around Australia in terms of how different regions expect inflation will go over the next two years. Australians in Country Areas now expect inflation of 5.7% over the next two years compared to only 5.1% for those in the Capital Cities.
“These differences play out on a state-based level with Inflation Expectations rising in Australia’s two most decentralised States, Queensland and Tasmania, in April. Queensland now has Inflation Expectations of 5.8% in April – the highest of any State for the first time this year.
“In contrast, Australia’s most heavily centralised State, Western Australia, has the lowest Inflation Expectations for the fifth straight month at only 4.9%, down 0.2% points for the month of April.
“These results show that inflation is not hitting all Australians equally and people living in Country Areas are consistently feeling the price increases in the economy to a greater degree than those in the larger Capital Cities. Inflation Expectations in Country Areas have now been higher than those in Capital Cities stretching back nearly three years to June 2020.
“The next ABS CPI monthly inflation figures for April are due to be released in just over two weeks on May 31. If the trends we have seen in recent months continue we can expect to see a further decline the official monthly CPI results which will follow the monthly Inflation Expectations figures for April released today.”
The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source which has interviewed an average of around 4,900 Australians aged 14+ per month over the last decade from May 2013 – April 2023 and includes interviews with 7,489 Australians aged 14+ in April 2023.
For comments and information about Roy Morgan’s Inflation Expectations data, please contact:
Roy Morgan Enquiries
Office: +61 (3) 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 |
