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Inflation Expectations Remain Anchored

AUSTRALIA DATA

The Melbourne-Institute’s measure of consumer inflation expectations was stable in October at 5.4%, despite the rise in petrol prices during the month.

  • This is consistent with the RBA’s regular statement that inflation expectations continue to be anchored. Consumers seem to believe that the current monetary tightening cycle will be successful in reining in inflation.
  • While +5% inflation is still too high, the stability in expectations supports the pivot to a slower pace of hiking.
  • Inflation expectations are pointing to a pick up in Q3 CPI and while it is still very early in Q4, there could be a stabilisation in the final quarter of 2022.
CPI vs MI consumer inflation expectations

Source: MNI - Market News, Refinitiv, Melbourne Institute

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