Inflation expectations for the median American household remain low, despite a new consumer price index (CPI), issued by the Bureau of Labor Statistics, showing an 8.2% year-over-year increase.
A sample of U.S. households expects inflation to drop next year and reach comfortable levels five years from now. That’s according to a new study released by the New York Fed, based on the agency’s Survey of Consumer Expectations, a monthly survey of about 1,300 household heads in the U.S.
Is there light at the end of the tunnel? Annual inflation for August reached 8.3%, down from 8.5% in July and 9.1% in June.
The survey comes on the heels of the Producer Price Index for final demand in the U.S., released on Wednesday, showing a 0.4% month-over-month increase in September.
The Federal Reserve is expected to continue to raise interest rates as the agency’s most powerful weapon against inflation. The fed funds rate is currently at between 3% and 3.25% and analysts are expecting rates to continue to rise while inflation remains high.
Several Fed officials stated last month that rates need to continue to go up throughout late 2022 and 2023 to levels above 4% in order to bring inflation back down to 2% a year.
Survey Results: Most Americans Are Expecting Inflation To Cool Down
In spite of inflation levels being at their highest in over four decades, the households surveyed say prices will drop in the coming years to more comfortable levels. Furthermore:
- Median one-year ahead inflation expectation dropped in September to 5.4% in a downwards trend from a June peak of 6.8%.
- Median three-year ahead and five-year ahead inflation expectations rose slightly from August to 2.9% and 2.2%, respectively.
- Results remain consistent across most demographics, including age group, education level, income level and geographical region.
Image and article originally from www.benzinga.com. Read the original article here.