Monday, December 21st, 2009
An increase in consumer inflationary expectations could add to the case for a fourth consecutive interest rate rise by the Reserve Bank of Australia to curb price pressures.
A survey of consumer inflationary expectations showed a rise of 0.4 percentage points to 3.6 per cent in December.
Only 17.7 per cent of respondents expect the rate of inflation to fall to between the central bank’s two to three per cent target band, down from 18.7 in November.
A 25 basis-point rate hike by the central bank on December 1 appeared not to have curbed consumers’ inflationary expectations.
The Reserve Bank of Australia’s December rate rise followed similar moves in October and November.
This is a little surprising given the decline in median inflation expectations in November from 3.5 per cent to 3.2 per cent following the Reserve Bank board’s previous rate hike announced on November 3. Barring any major shocks, this months jump in inflationary expectations appears to pay the way for a further rate hike in February 2010.
In a survey of 1200 people conducted between November 30 and December 6, the share of respondents expecting prices to increase rose by 2.8 per cent.
The proportion predicting no price change fell by 3.5 per cent while 0.1 per cent anticipated prices to fall.
The consumer price inflation rate rose by 1.0 per cent in the September quarter for an annual rate of 1.3 per cent, the last Australian Bureau of Statistics showed.
The ABS will release its consumer price inflation report for the December quarter on January 27, 2010.