People shop at a supermarket in Montebello, California, on August 23, 2022.
Frederic J. Brown | AFP | beautiful pictures
Falling gas prices are fueling optimism that inflation is falling, according to a survey Monday from the New York Federal Reserve.
Respondents to the central bank’s August consumer expectations survey said they expect the annual inflation rate to be 5.7% a year from now. That is down from 6.2% in July and the lowest since October 2021.
Three-year inflation expectations fell to 2.8% in August from 3.2% the previous month. That’s the lowest level for that measure since November 2020.
The bearish outlook comes amid a drop in gasoline prices from more than $5 a gallon in early summer, a nominal record high. The current national average is about $3.71 a gallon, still much higher than a year ago but down about 26 cents from the same time in August, according to AAA.
According to the Fed survey, consumers now expect gas prices to be little changed a year from now. Food prices are expected to continue to rise, but an increase of 5.8 percent a year from now is expected, 0.8 percentage points lower than in July.
Rents are expected to rise 9.6%, but that’s a 0.3 percentage point drop from the July survey.
Those numbers come when the Fed is using a series of strong interest rate hikes to combat inflation, which is still near its highest level in more than 40 years. The central bank is expected to approve a 0.75 percentage point increase for the third time in a row when it meets again next week.
Cost of living increases
While consumers expect inflationary pressures to ease somewhat, they still expect the cost of living to continue to escalate.
Average expectations for next year’s household spending rose 1 percentage point to 7.8% in August, a growth outlook driven mainly by those with a high school education or less and a key group of people. includes those with lower incomes.
Moreover, the respondents said that it is more difficult to get credit nowadays. According to the New York Fed, reports that it is now harder to get credit have risen to a mass high, with 57.8% reporting that it is harder or much harder.
Additionally, those expecting to not have to pay a minimum debt over the next three months rose 12.2%, an increase of 1.4 percentage points, the highest since May 2020.
The Bureau of Labor Statistics will release the August consumer price index on Tuesday. Economists surveyed by Dow Jones expect CPI to rise 8% from a year ago, although they fell 0.1% from July. Excluding food and energy, the core consumer price index is expected to increase by 6% year-on-year and 0.3% month-on-month.
