A recent survey conducted by the New York Federal Reserve reveals that the medium-term inflation expectations of U.S. consumers have dropped to the lowest level since 2013. Projected inflation over the forthcoming three years dipped to 2.35% in January – the lowest in approximately eleven years of data tracking.
The central inflation expectations for both the upcoming year and the next five years remain static from the previous month, standing at 3% and 2.5% respectively. This data will likely alleviate Fed officials who aim for a stronger assurance that inflation will hover near their 2% target before initiating interest rate cuts.
As per the January survey, American consumers' inflation expectations concerning regularly purchased items, such as food and gasoline, decreased comparatively. The expected annual change in gasoline prices plunged to 4.2%, reaching the lowest point since December 2022, whereas anticipated alterations in food prices fell to 4.9%, the lowest since March 2020.