Sunday, September 19, 2021

Consumer inflation expectations hit 8-year high: NY Fed

Inflation expectations among US consumers rose to an eight-year high in August, according to a new survey by the New York Federal Reserve.

According to the September 13 survey, short- and medium-term inflation expectations in August reached their highest level in the history of the series, which dates back to 2013.

Consumer expectations for what inflation will be over a one-year horizon rose from an average of 4.9 percent in July to 5.2 percent in August. Americans age 60 and older reported the most projected increases in prices in the short term, predicting an average inflation rate of 6.0 percent, while those under 40 reported the lowest, 4.5 percent. Breaking down by income, those earning between $50,000 and $100,000 reported the highest one-year forward average inflation rate of 5.5 percent, while those earning more than $100,000 reported the lowest, 4.9 percent.

Consumer expectations for what inflation will be over a three-year horizon rose from an average of 3.7 percent in July to 4.0 percent in August. The highest projected increase in the three-year forward rate of inflation was expressed by Americans age 60 and older, with an average prediction of 4.9 percent. Under-40s reported the lowest at 3.0 percent. Breaking down by income, those earning between $50,000 and $100,000 reported the highest three-year forward average inflation rate of 4.2 percent, while those earning more than $100,000 reported the lowest, 3.5 percent.

The New York Fed’s Consumer Expectations Survey, which is based on a rotating panel of 1,300 households, can be a helpful gauge for Fed officials as they weigh inflation outlook and related policy moves. The Fed’s policymakers are discussing how and when to begin pulling back on the extraordinary support measures provided during the COVID-19 pandemic, with some officials expressing concern that recent inflationary pressures have been higher than anticipated. can last for a long time.

Last year, the Fed cut its benchmark overnight interest rate to near zero and began buying $120 billion in treasury and mortgage-backed securities each month to bolster the economy. Although rate hikes have yet to be revealed, Fed officials are considering when to begin asset purchases, with anticipation building ahead of the September 21-22 meeting of the Federal Open Market Committee. Possible announcement on the tapering timeline, the Fed’s monetary policy decision-making body.

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Yug Times Photos
The Federal Reserve Board building on Constitution Avenue in Washington on March 27, 2019. (Brendan McDiarmid/Reuters)

The Consumer Inflation Expectancy Survey also comes ahead of the much-anticipated September 14 release of the Labor Department’s Consumer Price Index (CPI), which will show the extent of the upward pressure in August. Last month’s data showed consumer prices rose again in July, albeit at their slowest monthly pace since February, with the CPI jumping 0.5 percent in June to July, after a previous monthly increase of 0.9 percent. Year-on-year consumer price inflation stood at 5.4 per cent in July, matching the June figure, the highest 12-month increase since 2008.

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Global stocks and the dollar held steady Tuesday morning ahead of the CPI release, which will be closely watched by investors looking for clues to the Fed’s tapering plans.

Last week, the Labor Department reported that producer prices rose at their highest annual pace on record in August and slightly above expectations, reinforcing widespread concerns about rising prices as higher production costs deplete consumers. For the 12 months ending August, the final demand producer price index (PPI) rose 8.3 percent, the highest number in the series’ history since 2010, the Labor Department said in a September 10 release. said in. On a month-on-month basis, the final demand PPI rose 0.7 per cent in August, down from 1.0 per cent recorded in June and July, indicating that the peak in producer price inflation may be passing.

tom ozimeko

Tom Ozimek has an extensive background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he’s heard from Roy Peter Clark: ‘Hit your goal’ and ‘Leave the best for last.’

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This News Originally From – The Epoch Times

Consumer inflation expectations hit 8-year high: NY Fed
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