Crikey

The Melbourne Institute today released consumer inflationary expectations for August.

The median expected inflation rate of managers and professionals was 3.8% in August. Those working as clerks and salesperson registered the highest median expected inflation rate (4.7%) in August. For the States, the median expected inflation rates for Queensland (4.8%) was the highest recorded.

This survey was conducted in the week following negative news of the Reserve Bank raising the cash rate to 6.5% to contain inflationary pressures and the turmoil in the world financial markets due to subprime mortgage problems in the US.

The previous month’s reading was 3.5%, but it is worth noting that this measure is mostly above actual inflation — ie. consumers seem to have an inflation bias in their thinking, or else the measure is somehow biased.

The Roy Morgan Research measure of Consumer Confidence is published today. It shows confidence has dipped slightly from 30-month high it experienced in July. Based on 929 interviews, the August rating is 125.2, down 1.6 points from July and 1.5 points above the 2007 average of 123.7.

Pollster Gary Morgan comments:

Although interviewing for this month’s Consumer Confidence was conducted prior to last week’s interest rate rise, it was widely assumed on the weekend of August 4/5 that rates would be going up - this undoubtedly played a part in the decrease in confidence for August.

Henry envisages that the September rating will fall further, primarily because of the interest rate rise and the dramatic falls the stockmarket is currently experiencing.

Finally, if you are interested in the esoteric question of how central banks ought to respond to asset booms and busts, Henry’s Blog today is for you.

Read more at Henry Thornton