US Consumers’ Inflation Expectations Slip in New York Fed Survey

Consumer expectations for US inflation in one year’s time declined slightly in the latest survey by the Federal Reserve Bank of New York.

(Bloomberg) — Consumer expectations for US inflation in one year’s time declined slightly in the latest survey by the Federal Reserve Bank of New York.

Median one-year-ahead inflation expectations declined by 0.2 percentage point to 5% in December, its lowest reading since July 2021. Expectations for inflation three years ahead were unchanged at 3%, according to the New York Fed’s Survey of Consumer Expectations. 

Longer-term inflation expectations edged up slightly, driven by higher price expectations from younger respondents. Median five-year-ahead inflation expectations increased by 0.1 percentage point to 2.4%.

US year-ahead inflation expectations for some of the most commonly used goods — gasoline and food — declined by 0.7 percentage point. One-year ahead food price expectations slowed to 7.6%. 

Relief at the Pump

The drop in gasoline prices over recent weeks played a big part in easing household concerns. The New York Fed survey found that consumers now expect gasoline to rise by 4.1% over the coming year, down from 10% in March. The national average price of regular gasoline is down to $3.28 from over $5 last June.

The Labor Department will release the December reading of the consumer price index on Thursday. Economists polled by Bloomberg expect month-on-month CPI to be unchanged while the annual rate is seen continuing to cool. 

Expectations for rental-price increases in the coming year fell to a 21-month low of 9.6%, according to the New York Fed. Its online poll is based on a rotating sample of about 1,300 households.

A separate survey by Fannie Mae, also released Monday, estimates that rents will rise 5.5% over the period, while home prices are expected to fall by 1.6%. It’s the fifth consecutive month respondents say home prices will fall in the year ahead.

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