Australia - Consumer inflation expectations (June): 3.6% (prior 4%)

Author: Eamonn Sheridan | Category: Education

The Melbourne Institute (MI) Inflation Expectations for June 2017

  • In May it was 4%
In the survey consumers are asked whether, and by how much, they believe the prices of goods will change over the next twelve months.

The point about consumer inflation expectations (I've posted on this before) is that there is a concern from central banks is to keep inflation expectations "anchored".

In a nutshell, the argument is that inflation expectations can become self-fulfilling. During times of increasing inflation - people see inflation rising so they tend to buy more quickly, thus prompting prices to rise faster. People expect faster inflation (i.e. its 'unanchored' ... rising quickly).
On the flipside, if inflation is either very low or in deflation (i.e. general falling prices ... and "Hello" to Japan), people hold off purchasing 'cause there is no rush if prices are falling, and again the argument is this behaviour can feed on itself and grow as a problem. People expect falling prices to fall harder ('unanchored')
Yeah, yeah, bring on the jobs report!