The ANZ-Roy Morgan Inflation Expectations measure held at 5% in late September, the same as the full month of August.
Monthly inflation expectations for August rose by 0.2 percentage points from July to 5% – the highest level since January. Over the past year, weekly readings have tracked between 4.2% and 5.2%, averaging 4.8%.
Roy Morgan CEO Michele Levine (pictured left) said expectations were being influenced by fuel prices.
“ANZ-Roy Morgan inflation expectations in Australia are unchanged so far in September and are now at 5%, in line with the result for the full month of August (5%),” Levine said in a media release. “Inflation expectations in the month of August were up 0.2% points from a month earlier.
“The indications so far this month are that inflation expectations for September will be in line with the six-month high in August and clearly above the levels of both June and July.”
Petrol prices have been central to recent fluctuations in expectations. In August, average retail petrol prices fell two cents to $1.78 per litre, after rising in July. Prices ranged from a high of $1.83 mid-month to $1.76 by month-end.
By mid-September, prices rebounded to $1.84 per litre – nearly identical to the August peak.
Levine noted that energy costs remain a key factor.
“The maintenance of an elevated level of inflation expectations in September is no surprise when one considers that the average retail petrol price in mid-September of $1.84 per litre, is almost identical to the high of $1.83 per litre reached in mid-August.”
Despite high expectations, official inflation remains under control. The ABS reported annual CPI at 2.8% for July, within the Reserve Bank’s 2–3% target band for the 12th consecutive month.
“The good news for Australians is that the official ABS inflation estimates have continued within the Reserve Bank’s preferred target range… averaging 2.4% during this period,” Levine said.
“The sharp reduction in inflationary pressures in the broader economy during which official annual inflation fell from 4.1% in 2023 to 2.4% in 2024… led to the Reserve Bank cutting official interest rates in February, May, and early August by a total of 0.75% to 3.6%.”
August state data showed mixed outcomes:
Expectations were stronger in regional areas (5.3%) than capital cities (4.9%).
While inflation expectations remain steady, consumer confidence tells a more cautious story – with sentiment falling to new lows in late September.
Meanwhile, ANZ-Roy Morgan Consumer Confidence fell 1.3 points to 84.6, the lowest reading since May’s federal election.
Buying sentiment weakened, with just 21% of Australians saying now is a good time to purchase major household items, compared with 34% who said it was a bad time.
ANZ economist Sophia Angala (pictured right) said weaker labour market data may have weighed on confidence.
“ANZ-Roy Morgan Australian Consumer Confidence declined for the second consecutive week, driven by falls across most subindices,” Angala said in a media release.
“Economic confidence weakened slightly, as household confidence in the economy over the next year fell to its lowest level since 13 April… Soft labour market data last week may have driven this result.”
For mortgage brokers, steady inflation expectations coupled with weak consumer confidence underline a mixed outlook: while falling official inflation and rate cuts support borrowing conditions, households remain cautious about spending and major purchases – a factor likely to influence demand for credit and refinancing in the months ahead.
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