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Fed survey: Consumers expect the annual inflation rate to be 5.7% a year from now, beating the 6.2% expectation in July – and they\u2019re more optimistic about the future.<\/span><\/span><\/span><\/p>\n<\/div>\n NEW YORK \u2013 Consumers expect prices to fall across most areas of spending, according to a recent survey from the\u00a0Federal Reserve Bank of New York.<\/span><\/span><\/span><\/p>\n In the\u00a0August 2022\u00a0Survey of Consumer Expectations, consumers said they expect the annual inflation rate to be 5.7% a year from now. That\u2019s an improvement from the Fed\u2019s July survey, in which respondents said they expected the rate to be at 6.2% next year.<\/span><\/span><\/span><\/p>\n Three-year inflation expectations fell to 2.8% in August, down from 3.2% the previous month. And consumers said they expect prices to decrease further over the next five years, projecting that the inflation rate will hover around 2% in 2027.<\/span><\/span><\/span><\/p>\n The survey said that expectations for the prices of gasoline, food and rent over the next year also moved lower in August. And consumers reported feeling more optimistic about their \u201cfuture household income and financial situations,\u201d the\u00a0New York Fed\u00a0said.<\/span><\/span><\/span><\/p>\n \u201cMedian inflation uncertainty \u2013 or the uncertainty expressed regarding future inflation outcomes \u2013 decreased at the short-term horizon and was unchanged at the medium-term horizon,\u201d the survey said.<\/span><\/span><\/span><\/p>\n The\u00a0New York Fed\u00a0survey said that the consumer outlook on rising home prices has also improved. The expectation fell to 2.1% in August from 3.5% in July, marking the lowest reading since\u00a0July 2020.<\/span><\/span><\/span><\/p>\n \u201cThe decline was broad-based across demographic groups and geographic regions,\u201d the survey said. \u201cHome price expectations have now fallen by nearly two-thirds since the\u00a0April 2022\u00a0reading of 6.0%.\u201d<\/span><\/span><\/span><\/p>\n Consumers aren\u2019t the only ones anticipating a cooldown in home prices.\u00a0CoreLogic\u00a0predicted that home price growth will slow to 3.8% year-over-year by\u00a0July 2023. And\u00a0Black Knight\u2019s\u00a0data showed that median home price growth in July fell 0.77% from June \u2013 the most significant single-month decline since\u00a0January 2011.<\/span><\/span><\/span><\/p>\n However, consumers also indicated that they are less optimistic about financing options.<\/span><\/span><\/span><\/p>\n \u201cPerceptions of credit access compared to a year ago deteriorated, with the share of households reporting it is harder to obtain credit than one year ago increasing to a new series high,\u201d the survey said. \u201cSimilarly, expectations for future credit availability also deteriorated, with the share of respondents expecting it will be harder to obtain credit in the year ahead increasing to a new series high.\u201d<\/span><\/span><\/span><\/p>\n The\u00a0New York Fed\u2019s\u00a0consumer data was released just prior to the most recent inflation reading from the\u00a0Bureau of Labor Statistics\u00a0(BLS).<\/span><\/span><\/span><\/p>\n The Consumer Price Index (CPI), a measure of inflation, surged 8.3% annually in August. This is down slightly from 8.5% in July and a four-decade high of 9.1% in June. On a monthly basis, prices rose 0.1%, after a flat reading in July.<\/span><\/span><\/span><\/p>\n Lower gas prices helped offset the rise in other expenses like food, medical care and rent, according to the BLS report.<\/span><\/span><\/span><\/p>\n This reading will likely impact the Fed\u2019s decision on how much it should raise interest rates going forward as it continues its fight against rising inflation. Federal Reserve Chair\u00a0Jerome Powell\u00a0said at the central bank\u2019s annual symposium in\u00a0Jackson Hole, Wyo., last month, that the target was to bring inflation back down to 2%.<\/span><\/span><\/span><\/p>\n \u00a9 Copyright \u00a9 2022 Local TV LLC, The Credible Money Expert. All rights reserved.<\/span><\/span><\/span><\/p>\n<\/div><\/div>\n <\/p>\n <\/p>\n\nConsumers expect home prices to cool<\/span><\/span><\/span><\/h3>\n
Inflation rate still off the Fed\u2019s 2% goal<\/span><\/span><\/span><\/h3>\n