Inflation Expectations in late January are at 5.1% – down by 0.2% points from the month of December (5.3%)
The latest weekly Inflation Expectations are at 5.1% for the week of January 22-28, 2024 – in line with the four-week average of 5.1% and 0.2% points lower than the month of December.
A look at the monthly Inflation Expectations for December 2023 shows the measure at 5.3% for the month, a decrease of 0.1% points on November 2023 (5.4%). In the month of December 2023 Australians expected inflation of 5.3% annually over the next two years. However, since December ended, Inflation Expectations have continued to drop throughout the month of January.
A driver of the decline is the drop in the retail price of petrol. See below for additional detail of the impact of petrol prices on Inflation Expectations. In addition, the latest information on weekly Inflation Expectations is available to view each week in the Roy Morgan Weekly Update video on YouTube.
Inflation Expectations are following a similar trend as the broader official inflation measure. The latest ABS monthly CPI estimate for November 2023 showed a decline at 4.3%, down 0.6% points from 4.9% (October 2023) and down a large 1.3% points since September 2023 (5.6%).
The lower-than-expected inflation reading for November has raised hopes that the RBA will not undertake any further interest rate increases. The ABS will release the December quarterly and monthly inflation readings later this week which will inform the RBA’s actions at their first meeting of the year next week.
Monthly Inflation Expectations Index long-term trend – Expected Annual Inflation in next 2 years
Rapid petrol price declines in November, December and January ease inflation pressures
A leading factor driving the decrease in Inflation Expectations in recent weeks has been the declines in the retail petrol price – averaging $1.85 per litre in January – the lowest monthly average since July 2023 and down from over $2 per litre in late November.
However, despite the fall, average retail petrol prices in Australia have now been above $1.80 per litre for 29 straight weeks, the longest stretch at this high level ever recorded. The previous record stretch above $1.80 per litre was 13 weeks above this level earlier this year from February – July 2023.
Australian average retail petrol prices (cents per litre) weekly: 2021 – 2024
Inflation Expectations decreased in NSW and WA but were up in Victoria and Queensland
A look at Monthly Inflation Expectations on a State-based level shows decreases in the States of New South Wales, Western Australia, South Australia and Tasmania driving the overall monthly increase.
Inflation Expectations in New South Wales were down 0.2% points to 5.3% and in South Australia were down 0.3% points to 5.2%. Inflation Expectations plunged in Western Australia, down 0.8% points to 4.6% - and now the lowest of any State.
Inflation Expectations also took a tumble in Tasmania, dropping a large 1% point to 4.7%.
In contrast, there were increases to Inflation Expectations in Victoria, up 0.1% points to 5.4% and a more significant rise in Queensland, up 0.2% points to 5.8% - and now the highest of any State for the first time since May 2023.
Inflation Expectations in Country Areas increased by 0.2% points to 5.8% in December and are now significantly higher than in the Capital Cities at 5.1%, down 0.3% points from a month ago. The gap of 0.7% points between the Inflation Expectations in Country Areas and Capital Cities is the largest gap recorded at any stage during 2023.
Roy Morgan CEO Michele Levine says weekly Inflation Expectations were at 5.1% in late January, down from 5.3% in December as average retail petrol prices dropped to an average of only $1.85 per litre in January – the lowest monthly price since July 2023:
“ANZ-Roy Morgan Inflation Expectations in Australia have dropped in recent weeks and are now at 5.1% in late January, down from 5.3% for the month of December. Inflation Expectations reached a weekly high of 5.7% in mid-October 2023 and have trended lower over the last three months as petrol prices have fallen.
“Average retail petrol prices peaked at $2.11 per litre in October, and soon after that Inflation Expectations reached a weekly high of 5.7%. Since then, petrol prices have declined – down by around 25 cents per litre, and Inflation Expectations have also eased.
“Nevertheless, petrol prices have now been above $1.80 per litre for 29 straight weeks since mid-July – almost double the previous record of 13 weeks in a row achieved earlier this year. During this period petrol prices have averaged $1.96 per litre although have dropped around 10 cents per litre below this level in recent weeks.
“The reduction in inflationary pressures in the economy since October was recognised by the RBA at its final meeting of the year in early December. The RBA interest rate setting board decided to leave interest rates unchanged at a 12-year high of 4.35%.
“Since then, the latest ABS Inflation figures for November 2023 were released showing a continued plunge in the official inflation figures to 4.3% – down 0.6% points from October 2023 (4.9%) and down a large 1.3% points in only two months from September 2023 (5.6%).
“The ABS is set to release the December 2023 monthly and quarterly inflation figures later this week and if this plunge continues as expected the pressure for the RBA to continue to increase interest rates will recede further.
“An interesting phenomenon is emerging in recent months as the official inflation figures plunge with ANZ-Roy Morgan Inflation Expectations now significantly higher than the official measure. As we emerged from the pandemic Inflation Expectations led the official figures on the way up but now the Inflation Expectations measure is remaining ‘sticky’ while the official figures plunge.
“This suggests that although prices are not rising as fast as they were one-to-two years ago, consumers are still in the process of adjusting their expectations to the significantly higher prices we are now experiencing compared to a few years ago.”
See below for a comprehensive list of RBA interest rate changes during the time-period charted above.
The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source which has interviewed an average of around 5,100 Australians aged 14+ per month over the last decade from January 2014 – December 2023 and includes interviews with 6,028 Australians aged 14+ in December 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 |
