Inflation Expectations in late February are at 5.1% – unchanged from the month of January (5.1%)
The latest weekly Inflation Expectations are at 5.1% for the week of February 19-25, 2024 – in line with the average so far this year of 5.1% and unchanged from the month of January.
A look at the monthly Inflation Expectations for January 2024 shows the measure at 5.1% for the month, a decrease of 0.2% points on December 2023 (5.3%). In the month of January 2024 Australians expected inflation of 5.1% annually over the next two years – the lowest monthly figure for Inflation Expectations for two years since February 2022. Since January ended, Inflation Expectations have stabilised within a narrowband over the last few weeks.
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 December 2023 showed a decline at 3.4%, down a large 0.9% points from 4.3% (November 2023) and down a massive 2.2% points since September 2023 (5.6%).
The sharp drop in the official inflation readings to end 2023 with monthly inflation dropping a massive 2.2% points in only three months has raised hopes the RBA will not undertake any further interest rate increases. The ABS will release the January monthly inflation readings later this week which will inform the RBA’s actions at their next meeting set for a couple of weeks in mid-March.
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 has been the declines in the retail petrol price which averaged $1.85 per litre in January – the lowest monthly average since July 2023 and down from over $2 per litre in late November.
However, this fall in petrol prices was not sustained in February with average petrol prices jumping over 10 cents per litre to $1.96 per litre. Looking longer-term, average petrol prices have now averaged above $1.80 per litre for 33 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 a year ago from February – July 2023.
Australian average retail petrol prices (cents per litre) weekly: 2021 – 2024
Inflation Expectations decreased significantly in NSW and Victoria but were up in WA
A look at Monthly Inflation Expectations on a State-based level shows decreases in the States of New South Wales, Victoria and South Australia, but increases in Western Australia and Tasmania.
Inflation Expectations in New South Wales in January were down by 0.4% points to 4.9%, were down by 0.5% points in Victoria to 4.9% and in South Australia were down 0.1% points to 5.1%.
In contrast, Inflation Expectations rebounded in Western Australia, up by 0.5% points to 5.1% - and jumped in Tasmania, up by 0.9% points to 5.6%. The increases in Western Australia and Tasmania largely reversed the large plunges experienced in both States in December.
Inflation Expectations remained highest of all, but unchanged, in Queensland at 5.8% in January.
Inflation Expectations in Country Areas dropped significantly in January and were responsible for all of the monthly decline, down 0.6% points to 5.2%. In contrast, Inflation Expectations for Capital Cities were unchanged at 5.1% - both figures were the lowest for their respective areas since September 2023.
Roy Morgan CEO Michele Levine says weekly Inflation Expectations were at 5.1% in late February, unchanged from the monthly figure of 5.1% for January as average retail petrol prices stabilised over the last few weeks:
“ANZ-Roy Morgan Inflation Expectations in Australia have stabilised in recent weeks and are now at 5.1% in late February, unchanged from 5.1% for the month of January. Inflation Expectations reached a weekly high of 5.7% in mid-October 2023 and trended lower until mid-January but have stabilised in the last few weeks as petrol prices have again increased.
“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%. Petrol prices then dropped by almost 30 cents per litre by mid-January ($1.83 per litre) – but have since surged upward once more.
“Over the longer-term petrol prices have now been above $1.80 per litre for 33 straight weeks since mid-July – almost double the previous record of 13 weeks in a row achieved a year ago. During this period petrol prices have averaged $1.96 per litre and are at a similar level today in late February.
“The reduction in inflationary pressures in the economy since October was recognised by the RBA at its last meeting for 2023 and its first meeting this year, held earlier this month. On both occasions the RBA decided to leave interest rates unchanged at a 12-year high of 4.35%.
“Shortly before the RBA’s first meeting this year the ABS Inflation figures for December 2023 were released showing a continued plunge in the official inflation figures to 3.4% – down 0.9% points from November (4.3%) and down a large 2.2% points in only three months from September 2023 (5.6%).
“Later this week the ABS is set to release the January 2024 monthly inflation figures and if this plunge continues the pressure for the RBA to increase interest rates again 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 February 2014 – January 2024 and includes interviews with 6,032 Australians aged 14+ in January 2024.
For comments and information about Roy Morgan’s Inflation Expectations data, please contact:
Roy Morgan Enquiries
Office: +61 (3) 9224 5309
askroymorgan@roymorgan.com
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.
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 – 2024) | |||||||||||||
| 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 | 6.0 | 5.6 |
| 2023 | 5.3 | 5.3 | 5.6 | 5.3 | 5.2 | 5.6 | 5.6 | 5.4 | 5.2 | 5.3 | 5.4 | 5.3 | 5.4 |
| 2024 | 5.1 | 5.1 | |||||||||||
| Monthly Average | 4.8 | 4.8 | 4.9 | 4.8 | 4.8 | 4.8 | 4.9 | 4.8 | 4.8 | 4.8 | 4.8 | 4.8 | 4.8 |
| Overall: Roy Morgan Inflation Expectations Average: 4.8 | |||||||||||||
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.
RBA interest rates changes during the time-period measured: 2010-2023.
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 – 2013
November 2011: -0.25% to 4.5%; December 2011: -0.25% to 4.25%; 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%;
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 – 2016
February 2015: -0.25% to 2.25%; May 2015: -0.25% to 2%; May 2016: -0.25% to 1.75%;
August 2016: -0.25% to 1.5%.
2017 – 2018
There were no RBA interest rate changes during 2017-18.
2019 – 2020
June 2019: -0.25% to 1.25%; July 2019: -0.25% to 1%; October 2019: -0.25% to 0.75%;
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 (2022-23):
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%.
2023
February 2023: +0.25% to 3.35%; March 2023: +0.25% to 3.6%; May 2023: +0.25% to 3.85%;
June 2023: +0.25% to 4.10%; November 2023: +0.25% to 4.35%.
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 |
