In July, the median perceived inflation rate over the previous 12 months decreased to 3.5%, down from 3.6% in June. Median inflation expectations for the next 12 months also fell to 2.9% from 3.0%, while median inflation expectations for three years declined to 2.7% from 2.8%. Median inflation expectations for five years remained unchanged at 2.4%.
Uncertainty about 12-month inflation expectations remained unchanged and registered levels above those prior to the start of the Middle East conflict. Respondents from lower income quintiles continued to report higher average inflation perceptions and expectations than those from higher income quintiles. Younger respondents (aged 18 to 34) continued to report lower inflation perceptions and expectations than older respondents (aged 35 to 54 and 55 to 70).
Consumer expectations for nominal income growth over the next 12 months decreased to 1.0% from 1.1% in June. Perceived nominal spending growth over the previous 12 months remained unchanged from June at 5.1%. Expected nominal spending growth over the next 12 months also remained unchanged at 3.6%, with respondents from the three lower income quintiles expecting slightly higher spending growth than those from the two higher income quintiles.
Economic growth expectations for the next 12 months rose to −1.2% from −1.4% in June. Expectations for the 12-month unemployment rate remained unchanged at 11.2%. As observed in previous months, lower income households expected the highest 12-month unemployment rate (13.5%), while higher income households expected the lowest rate (9.4%). Consumers continued to expect that the future unemployment rate would be only slightly higher than the current perceived unemployment rate (10.6%), suggesting prospects for a broadly stable labour market.
However, quarterly data indicated a weakening in labour market sentiment. Unemployed respondents reported a lower expected probability of finding employment in the next three months, at 30.8% in July compared with 32.1% in April. Employed respondents reported a higher expected probability of job loss in the next three months, at 9.8% in July, down from 8.8% in April.
In July, consumers expected their home price to rise 3.4% over the next 12 months, unchanged from June. As in previous months, expectations for house price growth over the next 12 months remained on average higher in the lower income quintile (4.0%) than in the higher income quintile (3.1%). Expectations for 12-month mortgage interest rates declined to 4.9% from 5.0% in June.
As in previous months, lower income households expected the highest 12-month mortgage interest rates (5.7%), while higher income households expected the lowest rates (4.4%). The net percentage of households that reported a tightening of credit access over the previous 12 months increased compared with June, while the net percentage of households that expected more restrictive credit conditions over the next 12 months decreased. Quarterly data showed that the proportion of consumers that reported having applied for credit during the previous three months rose to 14.3% in July from 13.4% in April.
