Shoppers carry bags of purchases at the King of Prussia Mall in King of Prussia, Pennsylvania, on December 11, 2022.
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Consumers became more optimistic about inflation in November amid hopes that the rise in both food and energy prices will become less severe next year, according to a New York Federal Reserve survey released on Monday. .
The central bank’s Consumer Expectations Survey found that respondents saw inflation hovering at 5.2% for the year, down 0.7 percentage points from October’s figure.
This is the lowest level since August 2021. This is the early stages of a surge in inflation that has gripped the economy and forced his Fed into a series of aggressive rate hikes that are likely to continue this week. The latest annual inflation rate, as measured by the consumer price index, was 7.7% in October.
In addition to the brighter near-term outlook, the forecast for inflation over the next three years has fallen by 0.1 percentage points from the previous month to 3%. A relatively new set of data reflecting a five-year outlook saw him drop to 2.3% at the same level.
The survey comes as Federal Reserve officials said a 0.5% rate hike could take place this week when policymakers end their two-day meeting on Wednesday. That would be the seventh rate hike this year and would bring the Fed’s benchmark short-term borrowing rate to its 4.25% to 4.5% target range, the highest in 15 years.
But inflation news has improved at least slightly in recent days, a trend reflected in post-meeting communications from the Federal Open Market Committee, which sets rates, and Chairman Jerome Powell.
Respondents to a New York Fed survey said they expect gas prices to rise 4.7% and food prices to rise 8.3% over the next year. These increases are still out of line with an economy where inflation remains at the Fed’s 2% target rate, but are down 0.6 percentage points and 0.8 percentage points respectively from the previous month.
The survey also showed that wages are expected to increase by 2.8% over the 12-month period, falling by 0.2 percentage points each month, tying with the lowest level going back to August 2021.
However, household income is projected to grow by 4.5%, reaching a record high for a data series dating back to June 2013, with a monthly increase of 0.2 percentage points.
The outlook for the unemployment rate is actually brighter, with 42.2% of respondents saying they believe the unemployment rate will be even higher a year from now. A 0.7-point drop came despite U.S. Federal Reserve (Fed) officials expecting efforts to slow the economy would hit the labor market, which currently boasts a 3.7% unemployment rate. Happened.
Workers’ expectations that they would be able to find a job if they lost their current position also rose to 58.2%, the highest level since February 2020, just before the Covid pandemic took hold.
The next key inflation rate is released on Tuesday along with the Labor Department’s November consumer price index. Economists surveyed by Dow Jones expect the report to show a monthly increase of 0.2% and an annual increase of 7.3%. Excluding food and energy, core CPI forecasts are 0.4% and 6.1%, respectively.
