Expectations for near-term inflation spiked and household spending expectations are at a series high, New York Fed survy shows.
U.S. households’ expectations for the near-term future path of inflation surged back to record levels in May to 6.6% from 6.3% in April, according to the latest New York Fed survey, while expectations at the three-year horizon were unchanged at 3.9%.
The survey also shows household spending expectations over the next year rose to a new series high 9.0% from 8.0% in April, the fifth straight gain. Median expected growth in household income decreased 0.1ppt to 3.0% and the average perceived probability of missing a minimum debt payment over the next three months increased 0.4ppts to 11.1%.
Fed officials are eyeing longer-term inflation expectations for signs of a sustained rise. Richmond Fed President Tom Barkin told MNI last month he would not rule out a 75 bp rate hike if expectations looked to be getting out of hand. The median year-ahead expectation for home prices declined to 5.8% from 6.0% in April, while the expected change in the price of food, medical care and rent all fell 0.1ppt to 9.3%, 9.4% and 10.2%. The expected change in the price of gas rose slightly to 5.5% in May.
Source: New York Fed