According to a survey released by the New York Federal Reserve, the U.S. consumers’ expectations will change over the next year. In the coming three years this had rose last month to the highest levels since 2013. According to the monthly survey of consumer expectations, the inflation expectations over the next three years increased to a median of 4.0%.
A close watch on inflation expectations is kept by the US central bank officials. This is as they try to evaluate whether the pricing pressures are triggered by the coronavirus pandemic will pass or have more lasting effects on the economy. The massive asset purchases, that the Fed had launched last year was to support markets. The economy will sooner will give officials more options for responding down the road. Several policymakers said that they expect the Fed to begin winding those asset purchases.
The New York Fed survey showed that consumers are raising their expectations. This is all about the spending on housing, food and other essentials. Expectations for how much home prices will increase over the next year dropped again in August. Food prices are expected to grow by 7.9%. Rent is expected to increase by 10% over the next 12 months. The price of medical care is expected to rise by 9.7% over the next year. This report is based on a rotating panel of 1,300 households.