CANBERRA: In July Australians expect inflation of 4.3% per year over the next two years. This is up 0.1% in a month and inflation expectations are up 0.2% from a year ago in July 2016. However, despite the recent uptick, Australian inflation expectations remain well below average inflation expectations over the last seven years of 5.1% according to the latest Roy Morgan research with 5,061 Australians aged 14+ interviewed in July.
Analysis by State shows inflation expectations are highest in South Australia at 4.6% closely followed by New South Wales and Victoria, both at 4.5%. Inflation expectations in Australia’s other States were below the national average: Queensland and Tasmania both at 4.1% and Western Australia at 3.5%. Drilling down further and analysing Capital City inflation expectations over the past six years on a rolling annual basis shows inflation expectations have fallen across the board over the period. Hardest hit have been the two most mining intensive States: Inflation expectations in Perth have fallen from 5.8% to 3.6%, down 2.2% while inflation expectations in Brisbane have fallen from 6.0% to 4.2%, down 1.8%. In contrast, inflation expectations in the other Capital Cities have all fallen by less than 1.5% since the height of the mining boom in 2011-12.