US consumers’ inflation views ease for next year but worsen for long term

Published Wed, Oct 12, 2022 · 12:18 AM

Consumers see the US inflation rate cooling modestly over the next year, but are less optimistic in the longer term, according to the latest survey by the Federal Reserve Bank of New York.

Median one-year ahead inflation expectations fell to 5.44 per cent in September, down from 5.75 per cent in the prior month and the lowest in a year, the regional Fed bank said in a report on Tuesday (Oct 11). Three years from now, they see prices climbing 2.91 per cent, up from 2.76 per cent in August. Inflation views for five years ahead also rose.

Prices at the grocery store are a chief concern, with year-ahead expectations for food inflation climbing a full percentage point to 6.9 per cent in September, according to the survey. Consumers also see gas prices, the cost of a college education and rents on the rise, while they expect some moderation in medical-care costs.

Controlling inflation has become the top priority for the Federal Reserve, which is expected to boost interest rates by 75 basis points for a fourth-straight meeting next month. The central bank also pays close attention to inflation expectations, as they can become a self-fulfilling prophecy.

The US is experiencing the worst inflation in a generation. September’s data due on Thursday are expected to show that prices excluding food and energy are rising at the fastest annual pace in four decades. BLOOMBERG

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