A Federal Reserve survey on Monday showed that consumers were slightly more positive about inflation than they were in April. However, they expect to spend significantly more over the next year, which was revealed in a poll.
The median inflation expectation for next year was 6.3%. That’s a drop of 0.3 percent from the March record, which stood at 6.3%. Data going back to June 2013 shows that this is only a 0.3% decrease. Three-year expectations increased by 0.2 percentage points to 3.9%. This is still 0.3 percentage point below the record.
All data are included 12-month inflation in March running at 8.5%This is the highest point since December 1981. The April consumer price report will be published on Wednesday.
The Fed responded to price increases by raising benchmark interest rates last week by half percent. It was the highest increase in benchmark rates for 22 years and only the second rise of the year.
Neel Kashkari, Minneapolis Fed President, said that “We have our jobs to do” and that inflation must be brought down. He spoke to CNBC’s “SquawkBox” on CNBC. a Monday morning interview.
Americans still have reservations about the high costs of living. The New York Fed Survey projects that household spending will increase by 8.8% over the following year. It’s an increase of 0.3 percent from one month ago, and another series-high.
There was also optimism as consumers’ expectations of gas price rises fell to 5.2%. This is a drop of 4.4 percentage points that occurred as oil prices dropped in April. The respondents also felt more secure about their job, only 10.8% of them expecting to lose employment in the next twelve months. This is tied for an all time low.
Although home price expectations were stable, the anticipated 6% rise in prices was still significantly higher than long-term average.