[G3] Inflation expectations

G3 INFLATION EXPECTATIONS

‘Consumer expectations’ are measured by the Melbourne Institute Survey of Consumer Inflationary Expectations trimmed mean expected inflation rate for the year ahead; the data are collected monthly and end-quarter observations are shown. Data prior to 2019 are available from the Melbourne Institute.

‘Business expectations’ are measured by the National Australia Bank Quarterly Business Survey respondents’ expectations for the increase in final product prices over the next three months; annualised averages are shown.

‘Union officials' expectations’ are the median inflation expectations measured in a survey by the Australian Council of Trade Unions (and previously by the Workplace Research Centre and Employment Research Australia). ‘Market economists’ expectations’ are the median inflation expectations measured in a survey by the RBA. The surveys are held once each quarter following the release of the Consumer Price Index and before the publication of the Statement on Monetary Policy. The surveys collect expectations of inflation in the years to June and December quarters over the next one to two years. The dates refer to the quarter in which the survey data are collected. The 1-year-ahead expectations are for inflation over the year to the subsequent December quarter for surveys held in the December and March quarters are for inflation over the year to the subsequent June quarter for surveys held in the June and September quarters. The 2-year-ahead expectations are for year-ended inflation as at the December quarter of the following year for March and June quarter surveys; and for year-ended inflation as at the June quarter of the year after the following year for September and December quarter surveys. Between June quarter 2002 and December quarter 2004, the 1-year-ahead ‘Market economists' expectations’ are for inflation over the subsequent 4 quarters (inclusive of the quarter in which the data were collected). Prior to June quarter 2002, the 1-year-ahead ‘Market economists’ expectations’ are for inflation over the year to the subsequent June quarter for surveys held in the June and September quarters. Data were not collected for 1-year-ahead inflation expectations in March and December quarters. Prior to June quarter 2005, data were not collected for Market economists’ 2-year-ahead inflation expectations in the March and June quarters.

The ‘Break-even 10-year inflation rate’ is estimated based on the Reserve Bank of Australia (RBA)’s assessment of closing bond yields on Australian Government Securities. Assessments are informed by information provided to the RBA by a number of market participants, although the assessments are solely made by the RBA using its own judgment. End-quarter observations are shown. The RBA estimates 10-year nominal and inflation-indexed bond yields by linearly interpolating its assessment of closing bonds yields on AGS that are either side of 10 years to maturity; the break-even inflation rate is calculated as the nominal yield less the inflation-indexed yield. These yields are not (and are not administered by the RBA as) financial benchmarks, and are not accorded any special status by the RBA. These yields are provided as a convenience for the public and are intended for academic research purposes. The data quality of the RBA’s assessments of closing yields is not guaranteed, assessments may differ from market prices and the RBA’s methodology and information sources may change from time to time (without prior or subsequent notification). These data may not be available in a timely manner, can be subject to revisions, may be withdrawn or discontinued at any time (in whole or in part) and should not be relied upon for any regulatory or commercial purposes.