Consumer inflation expectations have declined across short-, medium- and longer-term time horizons, according to a survey from the Federal Reserve Bank of New York’s Center for Microeconomic Data.
The December 2023 Survey of Consumer Expectations showed median inflation predictions declined for all time horizons, falling from 3.4% to 3% for one-year-ahead, from 3% to 2.6% at the three-year-ahead, and from 2.7% to 2.5% at the five-year-ahead.
This means that short-term expectations had reached the lowest level recorded since January 2021.
The median year-ahead expected price changes increased for the cost of a college education to 6.3%, while they decreased for food to 5% and rent to 7.3%, and remained flat for gas at 4.5% and medical care at 9.1%.
The survey also analyzed Americans’ expectations about credit access and households’ financial situations, both of which turned less pessimistic in December.
While perceptions of credit access remain largely unchanged compared to last year, expectations of access improved with a larger share of respondents expecting looser credit conditions in 2024.
It also found that median house price growth expectations remained unchanged at 3%, remaining well above the series 12-month trailing average of 2.4%. The median expected year-ahead change in taxes was also unchanged at 4.1%.
Perceptions about households’ current financial situations also improved, with fewer respondents reporting being worse off than a year ago.
The survey also found earnings growth and spending growth expectations also decreased slightly to their lowest recorded levels since 2021.
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