Americans’ overall views on inflation barely changed in August, despite predicting an increase in prices of products such as rent, housing, and food, while lowering their opinion on their personal financial situation, the New York Federal Reserve reported.
“Respondents see inflation a year from now at 3.6 percent, up from 3.5% in July, while three years from now they estimate it at 2.8%, after 2.9%. “Five years from now, consumers expect inflation to be 3%, up from 2.9% in July,” the U.S. Federal Reserve said in its August consumer sentiment survey.
The relative stability of inflation expectations over the past month came as respondents expected price increases to accelerate for a number of key categories.
In August, the survey found expected price increases for gas, food, rent, medical expenses, and college. Respondents also predicted home prices would rise 3.1%, the highest reading since July 2022.
At the same time, respondents were more pessimistic about access to credit and their current and future financial situation, predicting that future household incomes would rise 2.9% in August, the weakest reading since July 2021.
The New York Federal Reserve survey was released on the eve of the Federal Open Market Committee’s next meeting, scheduled for May 19–20. Following the 25 basis point yield increase at the end of July, the Fed is expected to keep the overnight interest rate between 5.25 and 5.5%.
