US inflation expectations surge to highest level since 2013

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US consumers expect inflation to rise 5.3% a year from now

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Americans’ inflation Fears of hitting another record high in September, driven by rising prices for a range of consumer goods, according to a federal Reserve The Bank of New York survey was published Tuesday.

According to the New York Federal Reserve’s Survey of Consumer Expectations, the average expectation is that the inflation rate will be 5.3% a year from now, the 11th consecutive monthly increase and another new high for the gauge. Inflation expectations rose to 4.2% over the next three years, the third monthly increase and the highest rate since the survey launched in 2013.

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“The average inflation uncertainty – or the expressed uncertainty about future inflation outcomes – was unchanged on the short-term horizon and decreased over the medium-term horizon,” the survey said. “Both measures are still well above the levels seen before the COVID-19 outbreak.”

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Even though consumers are poised for the highest inflation level in nearly a decade, he said he expects the price of things like food, gasoline, medical care, rent and college tuition to drop next year.

Consumer prices rise 5% annually, highest since August 2008

Americans also forecast that home prices will fall slightly, with one-year expectations falling slightly to 5.5% in September, the fourth consecutive monthly decline. Despite the decline, it is still significantly higher than the last year’s average of 3.7%.

The report is based on a rotating panel of 1,300 homes.

Inflation has picked up as the economy recovered from last year’s brief but extremely severe recession.

Federal Reserve Chairman Jerome Powell has largely attributed the spike in consumer prices to pandemic-induced disruptions in the supply chain, labor shortages that push wages higher and a wave of consumers stuck with stimulus cash.

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Still, he said the rise in inflation is likely “transient” and warned about the dangers of the Federal Reserve acting unnecessarily to lower the benchmark federal funds rate. Estimates from the Fed’s rate-setting meeting predicted an annual inflation rate of 4.2% by the end of the year, up from 3.4% in June. Still, policymakers projected inflation to calm down to around 2.2% next year, in line with their target range.

“These bottleneck effects have been larger and longer-lasting than anticipated,” Powell said during a two-day meeting of the US central bank in September. “While these supply effects are prominent for now, they will subside. And as they do, inflation is expected to fall back toward our long-term goal.”


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