Consumer inflation expectations deteriorate

Inflation expectations have moderated and unemployment expectations deteriorated, adding to the case for additional interest rate cuts according to the Westpac-Melbourne Institute.

The Melbourne Institute survey of consumer inflation expectations reveals a significant moderation. The median inflation expectation was just 2.3% in June, down from 3.1% for May.

The step-up in inflation expectations evident over the first half of this year has been fully reversed. The latest reading is a touch below the 2.4% reported for last December. This is the lowest reading since early 2009 and before that, since 1998.

The survey found prices of key every day commodities, notably food and petrol, have eased in recent times and domestically, retailers have been discounting aggressively to clear stock.

Annual inflation, as measured by the headline Consumer Price Index, dipped below 2% in March, tumbling to 1.6% from 3.5% just six months earlier.

This article first appeared on SmartCompany.

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