Us consumer inflation expectations for the next year and the next three years rose in August to their highest level since records began in 2013, according to a survey released by the New York Fed on Monday.
The monthly survey showed that US consumer inflation expectations for the coming year rose to a median of 5.2 per cent in August, the 10th month in a row, and inflation expectations rose to 4.0 per cent over the next three years. The survey was launched in 2013 and both indicators hit an all-time high.
Fed officials are keeping a close eye on inflation expectations, and some policy makers say that if inflation lasts longer than expected, the Fed's massive asset purchases launched last year to support markets and the economy will come to an end sooner rather than late. this will provide officials with more options for the future. Several policymakers said they expected the Fed to start reducing asset purchases later this year, despite a slowdown in job growth in August.
A survey by the New York Fed shows that consumers are raising their expectations of how much they may have to spend on housing, food and other necessities next year.
Consumer expectations of how much house prices will rise in the coming year fell for the third month in a row in August, but remained high at 5.9%, the survey found. In addition, consumers expect food prices to rise 7.9 per cent in the coming year, up from 7.1 per cent in July; rents are expected to rise 10 per cent and medical prices are expected to rise 9.7 per cent-both 0.2 percentage points higher than in July.