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Australians’ Inflation Expectations unchanged at 5.1% in May after Treasurer Joe Hockey delivers his first ‘Horror’ Federal Budget

This face-to-face Morgan Poll on Australian inflation expectations was conducted during the month of May with an Australia-wide cross-section of 4,313 Australians aged 14+.

Australian Inflation Expectations over the next two years was unchanged at 5.1% per year in May. This is down 0.1% from a year ago in May 2013.

Analysis by State shows a geographic split in inflation expectations with a small rise in inflation expectations in the three Northern States offset by falls in inflation expectations in the three Southern States. Inflation expectations rose in New South Wales (5.5%, up 0.1%) – now with Australia’s highest inflation expectations, Queensland (5.4%, up 0.1%) and Western Australia (5.4%, up 0.2%).

In contrast, inflation expectations fell in Victoria (4.8%, down 0.1%), South Australia (4.4%, down 0.2%) and Tasmania (3.9%, down 0.6%) – now with easily the lowest inflation expectations of any State.

Analysis by Federal voting intention shows that L-NP supporters (4.2%) once again have clearly the lowest inflation expectations below Greens supporters (4.6%) and well below ALP supporters (5.5%). Supporters of Independents and Other parties (5.6%) once again have the highest inflation expectations in Australia.

The ANZ-Roy Morgan Weekly Consumer Confidence Rating has steadied in recent weeks and is this week unchanged at 102.2 after falling significantly from a high of 116.1 on April 19/20, 2014 and down slightly since May 3/4, 2014 (106.3). Australian Business Confidence also fell significantly in May (114.3, down 6.6pts) as the media highlighted many of the negative aspects of the Federal Budget.

Gary Morgan, Executive Chairman, Roy Morgan says:

“May’s Roy Morgan Inflation Expectations Index was unchanged at 5.1% as Treasurer Joe Hockey delivered his first Federal Budget and despite considerable falls in May in both the ANZ-Roy Morgan Consumer Confidence Rating (now 102.2, down from a high of 116.1 on April 19/20, 2014) and the Roy Morgan Business Confidence Rating (114.3, down 6.6pts in May).

“Despite remaining unchanged at a national level, Australian Inflation Expectations increased in all three Northern States – NSW (5.5%, up 0.1%), Queensland (5.4%, up 0.1%) and Western Australia (5.4%, up 0.2%) and fell in the Southern States – Victoria (4.8%, down 0.1%), South Australia (4.4%, down 0.2%) and Tasmania (3.9%, down 0.6%).

“Interestingly, looking at Inflation Expectations by Federal voting intention shows a clear split between supporters of the two major parties with L-NP supporters (4.2%) having far lower inflation expectations than ALP supporters (5.5%). This large divergence is perhaps indicative of how the two sets of supporters view the health of the Australian economy – A healthier and faster growing economy tends to experience higher inflation than a subdued slowing economy.”

This new research-based economic indicator is important for two reasons – it complements existing measures and is available earlier. 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.

This face-to-face Morgan Poll on Australian inflation expectations was conducted during the month of May with an Australia-wide cross-section of 4,313 Australians aged 14+.


For further information:

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Gary Morgan:

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Michele Levine:

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Monthly Roy Morgan Inflation Expectations Index (2010 – 2014)

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

 

 

 

 

 

 

 

5.1

Overall Roy Morgan Inflation Expectations Average: 5.6








Roy Morgan Inflation Expectations - May 2014 - 5.1%


The questions that are 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) If respondent says more than 5%.

“Would that be (x%) per year, or is that the total for prices over the next 2 years?”