NEW YORK–Everyday Americans expect inflation to rise much faster than the Federal Reserve and many experts are predicting.
In a poll conducted by the Federal Reserve Bank of New York, Americans said they see inflation rising to 4.8% over the next 12 months.
The Fed’s Consumer Expectations study, which samples a rotating panel of 1,300 households, showed that Americans in June predicted a median 12-month inflation rate of 4.8%, up 0.8 percentage points since May, as costs soared on numerous items Americans have been buying. That is the highest inflation expectation reported since the Federal Home Loan Bank of New York began the survey series.
Over the next three years, Americans told the New York Fed they see a median inflation rate of 3.6% over the next three years, which remains above the target 2% rate targeted by the Federal Reserve.
The big drivers of inflation expectations by Americans are rising prices they are seeing rising every day, such as gas and food. Those expectations have a basis in reality, as costs jumped 5% in May from one year earlier as measured by the Labor Department’s Consumer Price Index — the CPI’s biggest jump since 2008.
Other Findings
The New York Fed survey showed Americans in June said they expect the price of homes to continue rising over the next year by 6.2%. That is flat compared with May, but still much higher than last year’s average of 3.7%, the Fed reported.
The survey also showed Americans believe the cost of medical care, college and rent continuing to rise, while predicting the prices of commodities like gold, gasoline and food could dip slightly.
As CUToday.info reported, Federal Reserve Chairman Jay Powell is testifying before the House and Senate this week, and many will be watching for any signals related to inflation.