New York Fed: Consumers Expect Inflation to Slow

Among all demographics and across the three time periods about which they were surveyed, consumers said they expected the rate of inflation to slow, the Federal Reserve Bank of New York said in a Monday (June 9) press releaseabout the May edition of its Survey of Consumer Expectations.

“The declines in median one- and three-year-ahead inflation expectations were broad-based across age, education and income groups,” the release said.

Compared to a survey done a month earlier, consumers’ median inflation expectations for one year ahead declined by 0.4 percentage point to 3.2%, for three years ahead declined by 0.2 percentage point to 3% and for five years ahead declined by 0.1 percentage point to 2.6%, according to the release.

There was also a narrower range of disagreement between consumers about all three forecasts in May than there was in April, the release said.

Consumers also expressed less uncertainty about their expectations for the one-year horizon than they did in the previous month’s survey, per the release. The degree of uncertainty about the longer-range predictions was unchanged.

When asked about their expectations around home prices, consumers’ expectations about price growth decreased by 0.3 percentage point to 3%. This figure is at the low end of the range of 3% to 3.3% that has been recorded since August 2023, according to the release.

Consumers were also asked about their expectations of the prices of several commodities. Food was the only category in which they expected to see an increase in the rate of inflation over the next year. They predicted the rate of price increases to slow when it comes to gas, medical care, college education and rent.

The Bureau of Economic Analysis said May 29 that inflation remained sticky in the first quarter. The personal consumption expenditures (PCE) price index held steady at 3.6%, while the core PCE, which excludes food and energy, was revised slightly down to 3.4%.

The Federal Reserve Board said May 28 that while inflation and prices remain Americans’ top financial concerns, the share of U.S. adults who said changes in prices made their finances worse declined from 65% in 2023 to 60% in 2024.