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A survey from the New York Fed finds short-term expectations on consumer-level inflation are moderating. That could change later this week when the Fed announces what’s next in the fight against higher prices. File photo by Alexis C. Glenn/UPI |
License PhotoJune 12 (UPI) — Short-term expectations on consumer-level inflation slumped to the lowest level in two years, though consumers said their own financial situation was somewhat worse for wear, the New York Fed said Monday.
At 4.9% annually to April, consumer-level inflation remains above the target rate of 2% set by policymakers at the Federal Reserve. In its latest Survey of Consumer Expectations, the Federal Reserve Bank of New York said short-term inflation expectations are on the decline over the short-term time horizon.
“Median inflation expectations declined by 0.3 percentage point at the one-year-ahead horizon to 4.1%, the lowest reading since May 2021,” it said. “In contrast, median inflation expectations increased by 0.1 percentage point at the three- and five-year-ahead horizons to 3.0% and 2.7%, respectively.”
Prices are moderating. The all-energy component of the latest Consumer Price Index showed a 5.1% contraction to April, though food-at-home jumped 7.1% annually.
Stripping out volatile food and energy prices, however, and consumer-level inflation shot up 5.1% to April. Wholesale prices, however, are starting to wane. Consumers nevertheless are not expecting much of a raise to keep pace with inflation.
Consumers told the New York Fed they expected to see wage growth decline to 2.8% over the next year. The situation was more pronounced for workers with no more than a high school education.
On keeping a job, meanwhile, the Fed found that expectations of losing one’s job over the next year hit its lowest point since April.
With successive rate hikes from the Fed, it’s no surprise to find consumers reported it was more difficult to get credit relative to year-ago levels. While close to the 12-month trailing average, about 11% of the respondents said they may miss a debt payment over the next three months.
The Fed meets later this week to consider its next move in the fight against inflation.
