Consumer Inflation Expectations Posts Record-High 4.0% in May

Source: New York Fed

Household expectations on inflation hit a record-high in May, while remaining largely optimistic on the labor market for the year ahead.

• Data from the Survey of Consumer Expectations show that assumptions on inflation for the next year increased for the seventh straight month to 4.0% in May to mark a fresh series high.
• The year-ahead expected change in the price of food climbed 2.2 percentage points to 8.0%, and rent by 0.3 percentage points to 9.7%. Both are record highs.
• Median inflation expectations for the next three years rose to 3.6%, the highest in over seven years since August 2013.
• Uncertainty on future inflation outcomes increased for both short-term and medium-term horizons to remain above pre-pandemic levels.
• The median year-ahead expected earnings gained 0.4 percentage point to 2.5% in May driven mainly by respondents with a high school degree or less.
• Mean unemployment expectations fell to a series low of 31.9%. 
• The mean perceived probability of losing a job and leaving a job voluntarily in the next year both declined month-on-month.
• The expected growth in household income climbed to 2.8% to mark the highest since January 2020.
• Spending growth expectations jumped to a series high of 5.0%, as perceptions of credit access improved.