Consumer expectations of inflation were flat for the second straight month in October, after signs of an economic recovery failed to stoke fears of rising prices.
The Melbourne Institute (MI) survey of consumer inflationary expectations was unchanged in October at 3.5 per cent, matching its September and August result.
The share of consumers who expect inflation to be within the Reserve Bank of Australia's (RBA) two to three per cent target inflation range decreased 0.1 per cent to 17.3 per cent.
"These figures are consistent with the trend of relatively positive economic data observed in the last couple of months," MI research fellow Sam Tsiaplias said in a statement on Thursday.
"At the same time, the survey results do not suggest that consumer inflationary expectations are overly high."
The headline figure last changed in August, when it rose to 3.5 per cent from 3.2 per cent in July.
The October survey of 1,200 people aged 18 years and older was conducted from October 5 to 11.
In that time the central bank lifted the cash rate, for the first time in 19 months, from three per cent to 3.25 per cent.
In the same week, Australian Bureau of Statistics data showed the economy had spawned 40,600 new jobs in September and the unemployment rate dropped from 5.8 per cent to 5.7 per cent.
Those figures in turn fed into a positive consumer confidence report released on Wednesday.
The Westpac/Melbourne Institute Index of Consumer Sentiment rose by 1.7 per cent in October to 121.4. The index was 47.9 per cent higher than its value a year ago and a fraction short of its June 2007 high of 121.5.
Dr Tsiaplias said the marginal rise in consumer sentiment did not put the usual upward pressure on inflation expectations.
"When consumer confidence goes up, inflationary expectations also go up," he said.
"The reason for that is if consumer confidence rises because of some positive economic news, that tends to suggest that prices will rise in the future.
"The rise in consumer confidence we saw yesterday was slim, or not particularly significant compared to some of the big jumps we've seen in the last few months.
"Given that, inflation expectations didn't change much."
The inflation survey showed that the proportion of respondents who expect prices to rise fell by 1.2 per cent, while those anticipating prices to fall decreased 0.1 per cent in the month.
On a state by state basis, Queensland had the strongest inflationary expectation for the second straight month at 5.2 per cent, up from five per cent a month earlier.
Adelaide had the least inflationary expectations, down 0.1 per cent to two per cent in the month.
Operators and labourers were the most nervous about inflation.
The median expected inflation rate among blue collar workers was 4.4 per cent in October, up 0.6 per cent from September.
The median inflation rate among managers and professionals increased 0.3 per cent to 3.7 per cent.
Meanwhile, consumer anxiety about the job market fell for an eighth consecutive month in October and at a rate not seen since 1996, another joint Westpac/MI survey showed.
The Westpac-Melbourne Institute survey of unemployment expectations index fell 14.6 per cent in October to 112.38.
It was the largest month on month fall since March 1996, Westpac economist Anthony Thompson said in a statement on Thursday.
© 2009 AAP
