Consumers are expecting inflation to climb higher in the year ahead, but they have tempered their expectations for the three-year timeframe, according to a survey by the Federal Reserve Bank of New York's Center for Microeconomic Data.
Median one-year ahead inflation expectations rose to 6.0% from 5.7% in October, according the NY Fed's Survey of Consumer Expectations take in November.
Not surprisingly, they expect to spend more in the year ahead. Median year-ahead household spending growth expectations climbed by 0.3 percentage point to 5.7%, a new series high. The increase was largest for respondents with annual household incomes under $50K, the survey said.
For the three-year timeline, median inflation expectations fell to 4.0% in November vs. the 4.2% expectation in both the September and October surveys.
Respondents expressed more uncertainty over future inflation; median inflation uncertainty for both the short-term and medium-term horizons reached new series highs.
They expect the increase in home prices for the year ahead to decelerate to 5.0% from 5.6%, and now stands at the lowest level since March 2021.
Year-ahead price expectations for rent were unchanged at 10.0%, decreased by 0.2 percentage point for gas prices to 9.2%, increased by 0.1 percentage point for food prices to 9.2%, and increased by 0.2 percentage point for the cost of medical care to 9.6%; the median on-year ahead expected change in the cost of a college education rose by 1.6 percentage point to 9.1%, its highest level since March 2015.
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