According to survey results released Monday by the Federal Reserve of New York, consumers’ expectations for short-term inflation reached a record high in October, as per The Hill. A year from now, consumers expect inflation to rise by 5.7 percent — the highest reading since the poll began in 2013.
For the 12th month in a row, Americans’ fears of rising inflation climbed to a new record high in a Federal Reserve Bank of New York survey released Monday. 1,300 Heads of households are surveyed and consumer prices are expected to rise by a median of 5.7 percent over the next year, according to Fox Business.
As of September, consumer expectations for one-year inflation were at their highest level for the survey’s inception year, 2013, with an increase of 0.4 percentage points. While October’s record-setting 4.2 percent inflation rate for the next three years was maintained.
Consumers are bracing themselves for the highest levels of inflation in nearly a decade, and they anticipate that the cost of goods and services such as food, gasoline, rent, and college tuition will rise over the next year. Price reductions in home and medical care are the only things that Americans expect to be less expensive in the coming year.
Americans expect rent and food prices, which account for a large portion of household spending and are difficult to replace, to rise faster in the coming year. Prices for food and gas rose above 9 percent, while rents rose to a record high of 10.1 percent, the highest on record.
According to Bloomberg, for this year’s high inflation rate, the US central bank has blamed supply-chain bottlenecks and other temporary pressures linked to the economy’s reopening after pandemic lockdowns. There is, however, a concern that households may come to expect more of the same because of the larger and longer-lasting impact of those price increases than anticipated.
Consumer inflation expectations that continue to rise could result in what economists refer to as a wage-price spiral: higher prices prompting workers to demand higher wages, which in turn increases the need to raise prices, as per The Hill.
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