Inflation Expectations down 0.4% points to 5.5% in mid-July after rising significantly in June and early July
The latest ANZ-Roy Morgan Inflation Expectations are down 0.4% points to 5.5% in mid-July after increasing steadily during June. This week Australians expected inflation of 5.5% annually over the next two years.
Despite the weekly fall, the measure has averaged 5.7% so far in July after increasing significantly from a weekly low of 5.1% in mid-May. The monthly figure for June showed Inflation Expectations of 5.6%, an increase of 0.4% points from May, and the equal highest monthly figure so far this year after dipping to its lowest in over a year in May.
The latest information on weekly Inflation Expectations is available to view each week in the Roy Morgan Weekly Update video on YouTube.
Roy Morgan’s Inflation Expectations during 2023 have consistently been followed weeks later by the ABS CPI figures. The monthly ABS CPI figures dropped to 5.6% in May 2023 – down significantly by 1.2% points from April 2023 (6.8% annual CPI). If the trend continues, we can expect to see the ABS CPI annual figures for June 2023 register an increase after dipping in May. The ABS CPI figures for June are due to be released in two weeks on Wednesday July 26, 2023.
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 – June 2023).
Inflation Expectations increased in NSW, Queensland, Victoria and South Australia in June
A look at Inflation Expectations on a State-based level shows Inflation Expectations increasing in four States in June, remaining unchanged in Western Australia and dropping in Tasmania.
Inflation Expectations were up 0.6% points to 5.9% in New South Wales – and now clearly the highest in the country, and up 0.5% points to 5.8% in Queensland. These two States are now pulling Inflation Expectations higher for the rest of the country.
Inflation Expectations are now in line with the national average in Victoria at 5.6%, up 0.3% points from a month ago and just below the national average in South Australia at 5.4%, up 0.2% points.
Inflation Expectations in Tasmania went against the trend in June and were down 0.2% points to 5.1% while in Western Australia they were unchanged at 5.0% - the lowest in the country for the seventh month in a row.
Inflation Expectations in Country Areas were at 5.8% (up 0.2% points from May) in June, although there was a larger increase in the Capital Cities, up 0.5% points to 5.5% - the highest figure so far this year.
Roy Morgan CEO Michele Levine says Inflation Expectations increased in June by 0.4% points to 5.6% - and subsequent readings in the early part of July have continued this trend:
“Inflation Expectations in Australia increased sharply in June, up 0.4% points to 5.6% – the equal highest they have been so far this year on a monthly basis. The recent weekly readings have confirmed this trend with the average of Inflation Expectations so far in July hitting 5.7%.
“We have observed a consistent trend with Roy Morgan’s Inflation Expectations in recent years as the public sentiment regarding future inflation tends to be followed weeks, or months, later by the ABS CPI figures.
“The relevant factor here is that the monthly ABS CPI figures dropped to 5.6% in May 2023 – down significantly by 1.2% points from April 2023 (6.8% annual CPI). This lower-than-expected ABS CPI reading released in late June was part of the reason used by the RBA to justify holding interest rates unchanged at its July meeting a week ago.
“The dip in May was foretold weeks in advance by the weekly ANZ-Roy Morgan Inflation Expectations which had a yearly low of 5.1% in mid-May and a monthly low of 5.2% – before increasing rapidly in late May and throughout June.
“If the trend continues, we can expect to see the ABS CPI annual figures for June 2022 register an increase after dipping in May. The ABS figures are due out in two weeks on Wednesday July 26, 2023 – just before the RBA’s next meeting – at which many analysts expect the RBA will again raise interest rates after pausing in July.
“A look at the States shows Inflation Expectations were highest in the northern states of NSW at 5.9% (up 0.6% points) and Queensland at 5.8% (up 0.5% points) in June. In contrast, WA again has the lowest Inflation Expectations at only 5.0% – unchanged from a month ago.
“Inflation Expectations have now been lower in Western Australia than anywhere else every month so far this year and mirrors the consistently high Business Confidence in the same State – now at 141.1 and over 30 points higher than anywhere else.
“A detailed look at the latest Roy Morgan Business Confidence figures are available to view here.”
The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source which has interviewed an average of around 5,000 Australians aged 14+ per month over the last decade from July 2013 – June 2023 and includes interviews with 5,966 Australians aged 14+ in June 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 |
