Expectations for near-term inflation spiked but a decline in medium-term and long-term, New York Fed survey shows.
U.S. households’ expectations for the near-term future path of inflation increased again to a new series high of 6.8% in June from 6.6% in May, while expectations at the three-year horizon fell to 3.6% from 3.9% the previous month, according to the latest New York Fed survey.
Median five-year ahead inflation expectations, numbers that have been released on an ad-hoc basis since the beginning of the year, declined to 2.8% from 2.9%. Stable at 3.0% during the first three months of the year, the series has trended down slightly but disagreement across respondents in their five-year ahead inflation expectations has been trending up during this period and increased again in June, according to the New York Fed.
Home price growth expectations declined sharply in June to 4.4% from 5.8%, along with year-ahead spending growth expectations. Median year-ahead household spending growth expectations retreated from its series high in May, declining by 0.6ppt to 8.4% but remaining well above its 2021average of 5.0%. Fed officials are eyeing longer-term inflation expectations for signs of a sustained rise, with some former Fed officials and staff telling MNI inflation expectations already look unmoored.
Source: New York Fed