Households Expect 3.9% Inflation Over Next Year, Highest Since May 2023, New York Fed Survey Finds
Americans raised their one-year inflation expectations to 3.9% in September in the New York Fed’s consumer survey, the highest reading since May 2023, as households also marked down their financial outlooks.
U.S. households lifted what they expect inflation to be a year from now to 3.9% in September, the highest level since May 2023, according to the Federal Reserve Bank of New York’s latest Survey of Consumer Expectations, released Wednesday and reported by Reuters.
The one-year reading rose from 3.6% in August. Expectations for inflation three years ahead edged up to 3.3% from 3.2%, while the five-year outlook held at 3%, according to the survey.
Higher expected costs across household budgets
Respondents expected faster price growth across every major category the survey tracks, including gasoline, food, rent, medical care and college costs, Reuters reported. Households also rated both their current finances and their outlook for the year ahead more negatively than in August, and said credit had become harder to access, even as they reported somewhat less worry about missing a debt payment.
Views of the job market moved in the other direction. Compared with August, respondents were less likely to expect unemployment to be higher in a year, put lower odds on losing a job involuntarily, and expressed more confidence about finding work if they did. Households also said they planned to spend more in the months ahead, with that reading reaching its highest level since May 2023.
Reading arrives as Fed weighs next move
The survey lands while inflation remains above the Federal Reserve’s 2% goal. Policymakers raised their benchmark rate by a quarter point last month to a range of 3.75% to 4%, and investors are watching the December meeting as the most likely time for another increase, according to Reuters. Minutes from the September meeting were also due later Wednesday.
Minneapolis Fed President Neel Kashkari told Reuters last week that weak consumer confidence is primarily tied to price pressures, arguing that sentiment should improve once inflation returns to 2%.
Reporting based on coverage by Reuters.
