Inflation Expectations Just Hit a Record High. The Actual Numbers Tell a Different Story.

Australians expect prices to rise by 7.3% over the next year. That is the highest reading ever recorded in the ANZ-Roy Morgan survey, and nearly double the actual inflation rate.

The surge in expectations came fast. In February, Australians expected inflation of around 5.3%. By late March, that figure had jumped to 7.3%, driven largely by the fuel price spike after the Iran conflict escalated. Petrol went from roughly $1.69 to $2.19 a litre in a matter of weeks. By late April, expectations had eased slightly to 6.6%, but they remain well above the six-month average of 5.8%.

Actual inflation, measured by the ABS, sits at 3.7% annually. Trimmed mean inflation, which strips out the most volatile items, is steady at 3.3%. Both numbers have been flat or falling since early 2026.

The gap between the mood and the data

The distance between what people expect (7%+) and what's actually happening (3.7%) is one of the widest on record. And it matters, because expectations shape behaviour.

When people believe prices are about to surge, they do things that feel rational in the moment but often aren't. They rush a purchase to "beat the price rise." They accept a worse deal because they assume it will only get worse next month. They delay investing in their business because "now isn't the right time." Or they do nothing at all, frozen by the sense that everything is getting more expensive.

Some costs have genuinely jumped. Electricity is up 37% annually, largely because federal government rebates have been exhausted. Housing costs are up 7.2%. These are real and people feel them every week.

But other categories are moving the other way. Automotive fuel, despite the recent spike, was still down 7.2% year-on-year as of February. Transport costs overall fell 0.2%. Food is up 3.1%, roughly in line with where it has been for a year.

The picture is uneven, not uniformly bad. But fuel and electricity are the two costs people see most often, at the bowser and on their bill, so they anchor expectations to those numbers and project them across everything else.

What to do with this

If you have been putting off a financial decision because "everything is going up," it is worth checking whether the specific thing you are considering has actually moved. The ABS publishes inflation data by category every month at abs.gov.au, and you can see exactly what is up, what is flat, and what has fallen.

For bigger decisions, like a vehicle, equipment, or a renovation, ask your accountant, finance specialist, or supplier what they are actually seeing on pricing in that specific category. The answer might surprise you. Quoted prices for vehicles, for instance, have not moved the way people assume.

The fuel price spike is real and it stings at the bowser. But letting one visible cost set the tempo for every other financial decision is how good timing gets left on the table.

This article is general information only and is not financial advice.