MNI BRIEF: NY Fed Short-Term Price Expectations Decline
U.S. consumers' short-term inflation expectations eased further in December but were unchanged over the medium term and longer-term inflation expectations edged up slightly, according to a New York Fed survey of consumers released Monday.
Median inflation expectations for the year-ahead fell 0.2ppt to 5.0%, its lowest reading since July 2021. In contrast, the three-year-ahead measure was unchanged at 5.0% and the five-year-ahead edged up 0.1ppt to 2.4%, the New York Fed said. Expectations about home price growth jumped 0.3ppt to 1.3%, while median year-ahead expectations for gas and food prices declined 0.7ppts and rent declined 0.2ppt.
Household spending expectations fell sharply in December, down 1ppt to 5.9%, while income growth expectations rose 0.ppt to a new series high of 4.6%. Fed officials have been signaling they expect the fed funds rate to reach above 5% this year. (See: MNI INTERVIEW-Fed Rates To Peak Well Above 5%, No Cuts in 2023)
Source: New York Fed