Consumer expectations for inflation fell sharply in August from the previous month, according to a monthly Federal Reserve Bank of New York survey of consumers, good news for Fed officials on guard against price expectations de-anchoring.
Median one-year ahead inflation expectations fell to 5.7% from 6.2%, while the three-year ahead measure dropped to 2.8% from 3.2%, levels last seen before the pandemic, according to the survey. Respondents also disagreed more about the future path of inflation a year ahead and showed more certainty at the three-year horizon.
Median five-year ahead inflation expectations also declined, falling to 2.0% from 2.3% a month earlier. Expectations of home prices declined sharply by 1.4 pps to 2.1%, below pre-pandemic levels and the lowest reading since July 2020.
"Consumers were more optimistic about their future household income and financial situations," the New York Fed said.
Source: New York Fed