According to a survey by the New York Federal Reserve, consumers are concerned about inflation. Many expect inflation to rise in the next year.
The survey found that respondents expected inflation to rise by half of a percentage point over the next year, despite the U.S. Federal Reserve’s aggressive efforts to lower it. CNBC:
Respondents expected prices to rise by half of a percentage point over the next year, which equates to a 4.7% annual increase, according to the central bank branch’s March Survey of Consumer Expectations.
This is the first time that the near-term outlook has increased since October. It also contradicts Fed officials’ claim that inflation will decline as a series of interest rate hikes take place. According to their latest economic projections, policymakers expect inflation to fall to 2.5% by 2024. This includes food and energy prices.
While the Fed’s current inflation target of 2% is well within reach, the outlook for the next year is 6.6% lower than in 2022. Expectations for a three- and 5-year horizon were unchanged at 2.8%, and 2.5%, respectively.
The consumer outlook for gas prices in 2019 is slightly lower than February’s, with a 4.6% increase. Food prices are expected to rise by 5.9%. This was a decrease of 1.4 percentage points from the last month’s survey.
Access to credit is another concern. The NY Fed survey found that respondents are more worried about getting credit. 58.2 percent said it was much harder or slightly harder to get credit. This is the highest percentage in the survey’s history dating back to 2013.
A record 10.9 percent of respondents stated that they do not expect to make minimum debt payments in 2023.
According to the survey, even though inflation appears to be cooling, the public is still concerned about the impact of rising prices on their families. The economic data from the United States shows that second and third jobs are more difficult for families.
American consumers are most concerned about gas prices and food prices. The national average gas price is now $3.60 per gallon, compared to $3.47 a month earlier.
The U.S. Fed continues to raise interest rates, and fears about a recession are on the rise. However, Americans’ economic worries paint a grim picture of consumer morale.
Tuesday, April 12th will see the release of the next inflation report. Economists expect numbers to be in line with the six-month average. It is likely that the Fed will continue to raise its rates if this is true.
Three tech-aligned banks were facing a sudden collapse and there was fear of a financial crash. The Fed raised its rate by 25 basis points in March, despite a brief run on regional banks. The core consumer price index is expected to rise 5.6 percent compared to a year ago. However, inflation will remain well above the Fed’s 2 percent inflation benchmark, so hikes are likely.
