Petrol Prices & News Working In Opposite Directions On Expectations

Melbourne Institute consumer inflation expectations for March print at 1100AEDT. Last month they moderated to 5.1% y/y but have found it difficult to break through the 5% level, which they have exceeded since March 2022. This series often moves in line with petrol prices and they have fallen for the last 3 weeks, so there is a chance that this month is could fall below 5%. However, there has been a lot of media attention on cost-of-living pressures.

• Nationwide petrol prices are down 1.2% m/m for March to date after rising 2.8% in February. In the week ending March 12 they fell 1% w/w. They are now 4.2% off their mid-February peak. This should put some downward pressure on inflation expectations.
• In the March Westpac consumer confidence survey, 58% of respondents said they recalled news on “inflation”, which is not only a high proportion but the highest of all the topics covered. Also, 85% saw the news on inflation, rates and the economy as unfavourable. These perceptions could put upward pressure on inflation expectations.