Inflation worries are rising, according to new Federal Reserve data.
According to Monday’s New York Fed survey, consumers now expect inflation to reach 6.6% within the next year. This is according the March report. It’s an increase of 10% in the median inflation expectation in just one month. This was the highest point in the series which dates back to 2013.
According to the survey, median expectations for a 3-year period actually declined by 0.1 percent to 3.7%. This is mainly due to an eroding outlook among households earning below $50,000 per year.
Uncertainty about inflation in the past three years and for the next one is at record levels.
Expectations for household spending rose strongly, rising 1.3 percent to 7.7%. This is also an all-time high.
These data are available one day prior to the publication of the March consumer prices index. According to Dow Jones estimations, the index will indicate that prices rose at 8.4% per year over the previous 12 months. This forecast would make it the highest price since 1978, if accurate.
Last month, the Fed approved the first increase in interest rates for more than three decades to fight inflation. As inflation continues to rise well beyond the central bankās target of 2.2%, additional increases will be expected over the course of the year.
Ten.2% rent is responsible for the largest increase in consumer spending, accounting for approximately one third of the CPI. The CPI is expected to rise 9.6% for medical care, food, and gasoline. College costs are expected to drop by 0.5 percent, or 8.5%.
While wage growth expectations remained stable at 3% and 36.2% predicted that the unemployment rate would increase in the coming year, this is the highest number since February 2021. While unemployment stands at 3.6% right now, it is still higher than before the Covid pandemic, though participation in labor forces remains 1 point lower.
Anxiety about job stability increased slightly, but the likelihood of losing your job within the next year rose to 11.1%. That’s a gain of 0.3 percentage points that still falls well below the 13.8% level pre-pandemic.
