Inflation Expectations Hit Highest Level In A Year

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Inflation Expectations Hit Highest Level In A Year

Data released by research company Roy Morgan revealed last month Australians expected inflation of 3.8% annually over the next two years, the highest rate since March 2020.

Inflation expectations are now 0.9% points below their long-term average of 4.7% but have increased by 0.6% points since reaching a record low of only 3.2% in August 2020.

Roy Morgan CEO Michele Levine said this was most sustained trend of increasing inflation expectations for more than a decade.

“Inflation Expectations continued their upward trajectory in March 2021, up by 0.1% points to 3.8% and are now up 0.6% points over the last seven months since reaching a low of 3.2% in August 2020,” she said.

Also read: Your Inflation Questions Answered

“The largest Government stimulus packages such as the $100 billion JobKeeper wage subsidy have now ended and the trajectory of inflation expectations can act as a pointer towards the health of the Australian economy on a weekly and monthly basis.”

On a state-based level, inflation expectations were highest in Tasmania at 4.6% while Queensland was also significantly higher than the national average at 4.3%.

South Australia had the lowest inflation expectations at 3.3%.

Ms Levine said there continued to be a considerable ‘gender gap’ between women and men when it comes to their expectations of price increases over the next two years with women expecting annual inflation of 4.3% per year compared to only 3.4% for men.

“The persistent ‘gender gap’ on inflation expectations shows how the two largest segments of the population – men and women – are experiencing the current economy in a significantly different way,” she said.

“Women, who are more likely to be grocery shoppers and visiting the local supermarkets on a frequent basis, can see prices rising at faster rate than men who tend to be less likely to have this day-to-day interaction with fast moving consumer goods.

“There are many other prices to keep an eye on when assessing economy-wide inflation such as the prices of services such as housing prices, gas, electricity, internet, health-care, insurance, schooling, transport, clothes and entertainment but many of these types of goods and services are bought on a far more infrequent basis than the weekly grocery spend.”

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