Inflation anxiety is creeping back up.
Consumers now expect 3.9% inflation over the next year—highest since May 2023. That's up 0.9 points since February alone.
Breakdown of what people think prices will do:
• Gas: +4.8%
• Food: +5.5%
• Medical: +9.2%
• College: +7.5%
• Rent: +6.8%
Expectations have stayed above 3% for 22 straight months. Three-year outlook hit 3.3%, the highest in over two years.
This matters because what people expect about inflation often becomes self-fulfilling. If consumers think prices will keep rising, they act accordingly—demanding higher wages, spending now rather than later, adjusting budgets.
The Fed watches this data closely. Anchored expectations are crucial for their strategy. When they start drifting higher, it complicates the path back to 2% target inflation.
Bottom line: Americans aren't buying the "inflation is beaten" narrative yet.
Consumers now expect 3.9% inflation over the next year—highest since May 2023. That's up 0.9 points since February alone.
Breakdown of what people think prices will do:
• Gas: +4.8%
• Food: +5.5%
• Medical: +9.2%
• College: +7.5%
• Rent: +6.8%
Expectations have stayed above 3% for 22 straight months. Three-year outlook hit 3.3%, the highest in over two years.
This matters because what people expect about inflation often becomes self-fulfilling. If consumers think prices will keep rising, they act accordingly—demanding higher wages, spending now rather than later, adjusting budgets.
The Fed watches this data closely. Anchored expectations are crucial for their strategy. When they start drifting higher, it complicates the path back to 2% target inflation.
Bottom line: Americans aren't buying the "inflation is beaten" narrative yet.