Last week, Essential Research asked voters to give their impressions of how much prices had changed on a range of basic consumer items over the last two to three years. The results give us an idea of how realistic voters actually are about what’s happening with inflation.

Let’s start with something on which there is universal agreement: 70% of voters said they were paying “a lot more” for electricity and gas (22% said “a little more”). And that corresponds with reality: according to ABS inflation data, electricity prices have increased by 38 index points since December 2009, or over 16% a year. Gas has gone up by 29 index points, or around 11% a year.

So far so good — data and perceptions match. But what about petrol? That’s gone up by just over 16 index points, or just over 6% a year on average — ahead of CPI, but not in the same league as electricity. Yet 50% of voters say they’re paying a lot more than they were three years ago; 33% say a little more. That’s bordering on the implausible, but not wildly inconsistent with the electricity result.

On water, perceptions look more plausible: 47% said they were paying “a lot more” for water, and water prices have increased 22 index points or around 9% a year on average.

After that, though, there’s a growing gulf between perceptions of inflation and reality. Forty three per cent of voters say they’re paying “a lot more” for insurance. It’s true that many households in Queensland have been hit by higher premiums or even struggled to get insurance since the 2011 floods. But insurance across the country has only increased 10 index points, or less than 4% a year — around about CPI.

And 36% of voters complain they are paying “a lot more” for fruit and vegetables. Fruit and veg prices have been on a rollercoaster ride due to cyclones over the last couple of years, but in net terms, they’ve only gone up just over 10 index points since December 2009, or less than 4% a year; 43% of voters accurately said they were paying “a little more”. Twenty eight per cent said they were paying “a lot more” for food generally, when in fact food and non-alcoholic beverages prices have grown at less than the CPI; the 24% who thought they were paying “about the same” for food were more correct.

Health costs have gone up 15 points, or just over 5% a year, but 33% said they were paying “a lot more” for medical expenses. Just under a qaurter, 24%, thought they were paying “a lot more” for housing (both mortgages and rent) when housing costs have only increased slightly faster than inflation — however, that reflects the fact that 40% of respondents who rent said they were paying a lot more for rent, a sentiment we know to be accurate, especially in cities like Sydney.

Education costs have gone up by around 16 points, or about 6% a year, ahead of inflation, but only 24% said they were paying “a lot more”.

One category stands out as being the basis of what is almost a national delusion. Clothing has fallen in price by 7 index points or around 2% a year each year, since 2009 (kids’ clothing has fallen by more, 11 points). But 21% of voters say they’re paying “a lot more” for clothing, 30% say they’re paying “a little more” and 37% say they’re paying “about the same”. Only 9% accurately said they were paying “a little less”.

Clothing — and education — are less frequent purchases, so voters’ failure to properly comprehend price movements is perhaps more understandable (electricity bills are only quarterly but have attracted huge media and political attention). It’s also the case (except for property-related products like water and insurance), that renters tend to be more sensitive to price rises than those who have a home with a mortgage, who in turn are more inclined to see big price increases than those who own their home outright. For example, 25% of renters thought they were paying a lot more for clothing and 41% said they were paying a lot more for fruit and veg.

So frequency of purchase contributes to perceptions of price rises, as does income, to the extent that renting is a proxy for income. And there’s another factor that distorts perceptions: partisanship. On average, 10% more Liberal voters say they are paying “a lot more” for products compared to Labor voters.

Is that because Labor voters have a positively-skewed perception of the economy, or because Liberal voters have a negatively-skewed perception? A bit of both, it seems, but more the latter. Both share the delusion about clothing prices — 20% of Labor voters say they’re paying a lot more for clothing and 23% of Liberal voters. But 77% of Liberal voters more realistically say they’re paying a lot more for electricity, compared to 67% of Labor voters.

Other categories, though, suggest Liberal voters see price rises everywhere even when they don’t exist. Fifty eight per cent said they were paying “a lot more” for petrol, compared to 41% of Labor voters. Forty two per cent said they were paying a lot more for fruit and veg compared to 28% of Labor voters. Insurance was 50% to 38%. Food, 32% to 23%. Medical, 42% to 25%.

All this illustrates why it’s no good complaining about the current generation of politicians who eternally claim that families are “doing it tough” and struggling to “make ends meet”. A substantial proportion of voters will always be convinced inflation is much worse than it is, and in fact filter their perceptions of inflation through partisan bias. To tell voters otherwise is to tell them something they don’t already agree with, and that’s not a strategy widely in use among political tacticians currently.

Peter Fray

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