INFLATION (FINANCE) – AUSTRALIA

Inflation to rise ahead of plunge

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Original article by Matthew Cranston
The Australian Financial Review – Page: 6 : 28-Apr-20

The travel and accommodation sector is likely to be among the hardest hit when inflation data for the March quarter is released on 29 April. The inflation figures will reflect the impact of the bushfires and the early stages of the coronavirus crisis. The market consensus is for a headline inflation rate of 1.9 per cent for the year to March, while the Commonwealth Bank has forecast that inflation will reach two per cent for the first time since mid-2018. However, economists generally expect a negative inflation rate in the June quarter, a view shared by Reserve Bank governor Philip Lowe.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA

Inflation expectations down significantly in mid-April

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Original article by Roy Morgan
Market Research Update – Page: Online : 22-Apr-20

In mid-April there was a jolt to Australian Inflation Expectations, with a steep fall in the weekly index on April 18/19 to a record low of only 3.1%, down from 3.8% the week before and significantly below the 2020 weekly average of 4%. The weekly fall was caused by fewer Australians expecting prices to increase over the next two years, down to 69.4% (down 1.4% on a week ago) and more expecting prices to either decrease (up 1% to 10.8%) or ‘Stay the same’ (up 0.4% to 19.8%). Roy Morgan CEO Michele Levine says the steep drop in Inflation Expectations in mid-April comes as the impact of the COVID-19 pandemic begins to hit key pricing metrics in the economy.

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ROY MORGAN LIMITED

Economy to contract almost 4pc in 2020

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Original article by Sarah Turner
The Australian Financial Review – Page: 1 & 23 : 6-Apr-20

The median forecast of economists is that the Australian economy will contract by 3.9 per cent in calendar 2020, and by 1.1 per cent in the year to 30 June. The quarterly survey of economics also shows that the economy is expected to contract by 1.5 per cent in 2020-21, while economic growth is not forecast to rebound from the coronavirus until the end of 2021. Meanwhile, economists generally expect the unemployment rate to peak at 8.5 per cent by the end of June 2020, compared with 5.1 per cent at present. The inflation rate in turn is forecast to be 1.4 per cent in June, falling to 1.25 per cent by the end of the year.

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

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Original article by Roy Morgan
Market Research Update – Page: Online : 25-Feb-20

Australians aged +14 expect inflation of 3.9% annually over the next two years, according to the Roy Morgan Inflation Expectations Index for January 2020. 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 that 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 Greens supporters on 3.7%. January Inflation Expectations are based on personal interviews with a nationally representative sample of 4,052 Australians aged 14+.

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ROY MORGAN LIMITED

Rate cut chances tumble on inflation rise

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Original article by Adam Creighton
The Australian – Page: 2 : 30-Jan-20

Official data shows that headline inflation rose 0.7 per cent in the December quarter, compared with 0.5 per cent in the three months to September. The annual inflation rate rose to 1.8 per cent. Factors such as higher prices for fruit, meat and petrol contributed to the increase in the inflation rate. Ben Udy of Capital Economics says the CPI data should ensure that the Reserve Bank of Australia leaves the cash rate on hold in February. The central bank expects core inflation to rise to 1.8 per cent by the end of 2020.

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CAPITAL ECONOMICS LIMITED, RESERVE BANK OF AUSTRALIA, AUSTRALIAN BUREAU OF STATISTICS

Price expectations much higher for Young Parents than Young Couples with no children

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Original article by Roy Morgan
Market Research Update – Page: Online : 30-Jan-20

Australians as a whole expect prices to increase by 4% annually over the next two years, according to Roy Morgan surveys conducted in December. This is a slight increase of 0.1% on expectations in November, but down 0.2% on a year ago. Comparing price expectations by Household Life-Cycle shows that Young Parents expect prices to increase by 4.5% annually over the next two years – higher expectations than that of any other household type. In contrast, Young Couples who have no children expect price increases of only 3.3% per year. Most Household Life-Cycle segments cluster in the middle between these two, around the national average of 4%. Mid-Life Families (4.1%) and Young Singles (4.1%) are slightly higher, Older Households (4%) are right on the national average and Mid-Life Households (3.9%) are slightly below it.

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ROY MORGAN LIMITED

Price expectations higher in Country Areas than Capital Cities

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Original article by Roy Morgan
Market Research Update – Page: Online : 19-Nov-19

Surveyed in October, Australians as a whole expect prices to increase by 4.1% annually over the next two years. This is up very slightly (0.1%) on how they were feeling in September, but is down to a greater degree (0.4%) on their expectations a year earlier. Comparing price expectations around Australia reveals a significant divide between Country Areas with higher price inflation expectations than Australia’s Capital Cities. Australians in Country Areas expect prices to rise by 4.3% annually over the next two years, compared to only 4% in the Capital Cities. Price expectations in Country Victoria (4.8%) are higher than anywhere else in Australia and significantly higher than in the Victorian capital of Melbourne (4.1%). There is a similar dynamic at play in Country NSW (4.2%) compared to NSW Capital Sydney (3.8%) although the gap is narrower. The two exceptions to this rule are Queensland in which price expectations are at 4.4% throughout the State and South Australia. Price expectations in Adelaide (3.9%) are slightly higher than in Country South Australia (3.8%) although both are below the national average.

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ROY MORGAN LIMITED

CPI cools further rate cut chances

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Original article by Matthew Cranston
The Australian Financial Review – Page: 1 & 6 : 31-Oct-19

Official data shows that the consumer price index rose 0.5 per cent during the September quarter and 1.7 per cent year-on-year. Trimmed mean inflation was 0.4 per cent during the quarter and 1.6 per cent for the year to September. With the inflation rate remaining below the Reserve Bank’s target range of 2-3 per cent for a 15th consecutive quarter, the cash rate now seems likely to stay unchanged at 0.75 per cent for the rest of the year. Craig James of CommSec says the three interest rate cuts in 2019 have spooked consumers.

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RESERVE BANK OF AUSTRALIA, COMMONWEALTH SECURITIES LIMITED, CITIGROUP PTY LTD, ERNST AND YOUNG, BIS OXFORD ECONOMICS PTY LTD, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN BUREAU OF STATISTICS, AUSTRALIA. DEPT OF THE ENVIRONMENT AND ENERGY

Home owners and renters take different views on the level of future inflation

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Original article by Roy Morgan
Market Research Update – Page: Online : 21-Oct-19

Surveyed in September, Australians as a whole said they expected inflation to increase by 4% annually over the next two years. This is up very slightly (0.1%) on how they were feeling the previous month, but it is down a little (0.3%) on their expectations a year earlier. However there was a notable difference in the expectations of home owners compared to renters, with the latter taking a much more pessimistic outlook. Renters expect inflation to rise 4.7% over the next two years, while home owners expect inflation of 3.8% and those paying off mortgages are expecting only a 3.4% rise. September Inflation Expectations are based on personal interviews with a nationally representative sample of 4,012 Australians aged 14+. October survey responses will reveal the effect of the RBA’s decision to cut interest rates earlier this month, the third such cut this year, taking them to a record low of 0.75%.

CORPORATES
ROY MORGAN LIMITED, RESERVE BANK OF AUSTRALIA

Inflation Expectations down to 3.9% in August

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Original article by Roy Morgan
Market Research Update – Page: Online : 19-Sep-19

In August, Australians expected annual inflation of 3.9% over the next two years. This is down 0.2% on July and down 0.4% on a year ago in August 2018. Inflation Expectations decreased in August after the ABS reported Australia experienced its slowest GDP growth since the GFC in the year to June 2019 of only 1.4%. Analysing Inflation Expectations by gender and age compared to a year ago shows the biggest declines have been for women of all ages. Despite this, women continue to have higher Inflation Expectations than men across all age groups, while Analysis of Inflation Expectations by State shows decreases in Australia’s two largest states and a significant decline in Western Australia drove the index down in August. These are the latest findings from Roy Morgan’s Single Source Survey which is based on in-depth personal interviews conducted face-to-face with over 50,000 Australians per annum in their own homes. Inflation Expectations in August are based on personally interviewing a nationwide representative sample of 3,988 Australians aged 14+.

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ROY MORGAN LIMITED