Inflation expectations much higher among ALP supporters than Liberal, National or Greens supporters: Michelle Levine

EXPERT OBSERVER

Australians as a whole expect prices to increase by only 3.9% annually over the next two years, according to Roy Morgan surveys conducted in January. This is a slight decrease of 0.1% on December, but down 0.3% on a year ago.

This is the lowest expectation of future price increases to start a year since the series began in 2010 and compares to price expectations of 6.6% annually over the next two years in January 2011.

Comparing price expectations by Federal voting intention shows the highest price expectations are held by those voting for Independents/Others at 4.4% annually over the next two years equal to those who can’t say who they would vote for – also 4.4%.

In terms of supporters of the major parties ALP supporters expect annual price increases of 4.1% over the next two years which is slightly higher than the national average of 3.9% and significantly higher than both L-NP supporters on 3.5% and also Greens supporters on 3.7%.

Roy Morgan’s Inflation Expectations Index measures what Australians believe the future trajectory of prices will be over the next two years. Every Australian brings a unique perspective to the anticipated movement in prices, including which prices are important to them in particular – whether that be food and drink prices, the price at the pump, prices for clothing and footwear, the cost of going to the footy, or prices for financial products, education, housing or transport.

Price expectations in January have dropped to only 3.9% and are now below the record low yearly average of 4% in 2019. Importantly, there are clear differences in perceptions of price increases between supporters of different parties. ALP supporters are the only major party supporters with price expectations above the national average at 4.1% whereas there are significantly lower price expectations for both Greens supporters (3.7%) and L-NP supporters (3.5%) that provide a significant drag on the overall index.

Inflation Expectations by Voting Intention: January 2020

Source: Roy Morgan Single Source: January 2020, n=4,052. Base: Australians 14+.

Price expectations again highest in Queensland and Tasmania, lowest in WA and NSW

There are significant regional differences for price expectations over the next two years. Those in both Tasmania (5.4%) and Queensland (4.4%) continue to have far higher price expectations than anywhere else.

Price expectations in South Australia (4.0%) are marginally above the national average whilst they are slightly below the national average in Victoria (3.8%), NSW (3.7%) and WA (3.7%). 

Inflation Expectations Index long-term trend – Expected Annual Inflation in next 2 years

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Source: Roy Morgan Single Source: Interviews an average of 4,000 Australians per month aged 14+ (Apr. 2010 – Jan. 2020).

January Inflation Expectations are based on personal interviews with a nationally representative sample of 4,052 Australians aged 14+. Price expectations in 2019 averaged a record low 4% across the year slightly beneath the previous low of 4.1% averaged throughout 2016 and the mark of 3.9% for January represents the lowest price expectations to start a year since the series began in April 2010.

MICHELE LEVINE is the CEO of Roy Morgan