The median inflation rate is expected to eclipse 3.8 per cent by year’s end.
According to the Melbourne Institute Survey of Consumer Inflationary Expectations, inflation expectations increased to 3.8 per cent from 3.1 per cent in September, while the proportion of consumers expecting inflation to be within the RBA’s 2 to 3 per cent band decreased to 15.1 per cent from 19.0 per cent.
While inflationary pressures were widely expected to build up over the next 12 months, Melbourne Institute research fellow Dr Michael Chua said this month’s jump in inflationary expectations came as a surprise.
“More respondents in this survey are expecting price changes greater than 10 per cent in the next 12 months,” Dr Chua said.
“In contrast, the inflationary expectations of managers and professionals decreased from 3.4 per cent to 3.3 per cent, suggesting that not all respondents share the view that inflation will rise strongly. We are living in more uncertain times and this is showing up in the dispersion of views among the respondents.”
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