Inflation Expectations Stall But Close To Average

Melbourne-Institute inflation expectations for January were unchanged at 4.5% despite the well-publicised fall in CPI inflation and last week’s petrol prices being 3.1% lower than the last week of 2023. It is likely that consumers are still feeling the pressure of household bills and grocery costs. The December/January readings are the lowest since February 2022 but still 0.1pp higher than the series average and 0.3pp above the average since 2010. It is good news though that short-term inflation expectations have moderated close to recent norms. Key Q4 CPI data are released on January 31 and will be an important input for the February RBA decision.