US consumers raised their expectations for inflation over the next year to 3.9% in September, the highest reading since May 2023, according to the Federal Reserve Bank of New York’s latest Survey of Consumer Expectations.
The one-year inflation outlook rose from 3.6% in August, while expectations for inflation three years ahead increased to 3.3% from 3.2%. The five-year outlook remained unchanged at 3%.
Households expect higher prices across all the major categories tracked by the survey, including gasoline, food, rent, medical care and college costs. The worsening inflation outlook was accompanied by weaker assessments of both current and future household finances and reduced confidence in access to credit.
The findings add to concerns facing the Federal Reserve as inflation remains above its 2% target. The central bank raised its policy rate by a quarter percentage point in September to a range of 3.75% to 4%, while policymakers’ projections indicated another increase could come before the end of the year.
There were some brighter signs in the survey. Consumers became less concerned about losing their jobs and more confident about finding work if they were unemployed. Expected future household spending also rose to its highest level since May 2023.
The survey suggests that inflation remains a major concern for US households even as some labour-market expectations improve.
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