Inflation expectations tick down but remain high: ANZ-Roy Morgan
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The news: Inflation expectations fell by 0.5 points to 6.6% last week, the lowest level since initial escalations in the Iran War in early March Morgan Australian Consumer Confidence data.
The numbers: Inflation expectations on a four-week moving average also fell 0.2 points to 6.9%.
Weekly consumer confidence rose 3.5 points to 67.8 points, the highest since mid-March but still among the lowest since the series began in 1973. The four-week moving average lifted 2.3 points to 64.7 points.
The sub-index for current financial conditions over the last year increased by 4.6 points while future financial conditions next 12 months increased by 0.1 points.
Short-term economic confidence over the next 12 months increased by 4.7 points while medium-term economic confidence over the next five years lifted 5.4 points. The time to buy a major household item increased by 2.4 points.
The context: Weekly inflation expectations hit a record high of 7.3%, in the last full week of March according to ANZ-Roy Morgan data. The down tick in expectations comes ahead of the release of the Australian Bureau of Statistics’ consumer price index data on Wednesday.
The RBA has been closely monitoring whether inflation expectations remain anchored to its target band of between 2% and 3% over the medium term.
ANZ economists are forecasting headline inflation for the March quarter to have risen 1.4% quarter on quarter, partially reflecting higher fuel prices, and sees the Reserve Bank of Australia increasing interest rates by 25 basis points in May.
Consumer confidence hit its lowest level in the week ended 20 March according to ANZ-Roy Morgan data. The improvement in confidence has been largely driven by sentiment on economic conditions.
The source: ANZ-Roy Morgan
