The weekly ANZ-Roy Morgan Inflation Expectations were 4.2 per cent for the week of February 17 to 23, down a significant 0.8 per cent from the month of January and the lowest since August 2021.
However, a look at monthly inflation expectations for January 2025 shows the measure at 5 per cent for the month – an increase of 0.2 per cent from the month of December, and just above the average for last year of 4.9 per cent. It is the second consecutive increase month-on-month.
Looking back over the last year, ANZ and Roy Morgan’s weekly inflation expectations have moved in a band of 4.2 per cent and 5.3 per cent since the start of 2024.
Roy Morgan CEO Michele Levine said the recent dip indicates inflationary pressures in the economy are significantly lower than where they were a year ago.
“The increase in inflation expectations towards the end of last year, and earlier this year, tracks with the average retail petrol price which increased late last year after hitting lows of $1.73 in each of late September 2024, mid-October, and again in the last week of November 2024.
“Importantly, since reaching that level, average retail petrol prices steadily increased in the next few weeks and months and have been consistently above $1.80 per litre since early December, putting upward pressure on Inflation Expectations and broader inflation.
“Over the longer-term petrol prices have been above $1.70 per litre for 127 straight weeks since mid-September 2022.”
This comes as the monthly consumer price index (CPI) indicator rose 2.5 per cent in the 12 months to January 2025, the same point as last month according to new data from the Australian Bureau of Statistics (ABS).
The largest contributors to the annual movement were food and non-alcoholic beverages (up 3.3 per cent), housing (up 2.1 per cent), and alcohol and tobacco (up 6.4 per cent).
Clothing and footwear CPI moved up by 2.1 per cent.
When prices for some items change significantly, ABS noted that measures of underlying inflation – such as the annual trimmed mean and CPI excluding volatile items and holiday travel – can give more insights into how inflation is trending.
“Annual trimmed mean inflation was 2.8 per cent in January, up slightly from 2.7 per cent in December,” ABS head of prices statistics Michelle Marquardt said.
“The CPI excluding volatile items and holiday travel measure rose 2.9 per cent in the 12 months to January, compared to a 2.7 per cent rise in the 12 months to December.”
According to Levine, the sharp reduction in inflationary pressures in the broader economy during 2024 – during which official annual inflation fell from 4.1 per cent in 2023 to 2.4 per cent in 2024 – led to the Reserve Bank to cut official interest rates by 0.25 per cent to 4.1 per cent at their meeting in mid-February 2025.
“The latest results from the weekly ANZ-Roy Morgan Inflation Expectations show a sharp decline in expectations but have been somewhat mixed over the last five to six weeks,” Levine said.
“This volatility suggests that upward pressures on inflation persist although the Reserve Bank’s decision to cut interest rates in February appears to have had a significant impact on the inflation expectations of Australians.
“The volatility in energy prices, and inflation expectations, shows how sensitive Australians are to changes in the prices of essential everyday goods – like petrol.”