US Consumer Inflation Expectations Soar to Highest in 8 Years

Expectations of consumer inflation surged to the highest in 8 years, as Americans continue to brace for elevated price gains amid the economic reopening.

According to the latest Federal Reserve Bank of New York survey of consumer expectations, inflation levels are projected to rise rapidly in the short-term, as the US economy continues to recover. In three years’ time, inflation levels are expected to hit 3.7%, the highest since August 2013. Similarly, consumers are anticipating inflation over the next 12 months will soar to 4.8%— the highest on record.

The survey’s respondents revealed that they anticipate rent prices to rise by 9.8% over the next year, also the highest reading on the survey’s record. Similarly, the anticipated changes in medical costs jumped to 9.5%, while expected changes in gasoline prices declined slightly to 8.1%. The survey’s results also showed that those individuals’ incomes that fell below $50,000 anticipate some of the sharpest price increases over the median term.

The NY Fed’s survey of inflation expectations provides additional insight into some of the main determinants of actual inflation. However, the survey’s latest results do not coincide with the broader market’s inflation forecasts, such as the 10-year breakeven rate, which has modestly alleviated since soaring in May.

Information for this briefing was found via the NY Fed. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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