The median consumer expectation for year-ahead inflation increased to 3.4% in April from 3.2% in March, according to the April Survey of Consumer Expectations released Monday. Now at its highest level since September 2013, the estimate for year-ahead inflation has increased for seven straight months. Consumers also expect inflation will have only slightly slowed, to 3.1%, in three years. This longer-term expectation, unchanged from March, remains at its highest level since July 2014, suggesting consumers don’t see inflation easing after this year like the Federal Reserve does. The Fed has said that any spike in prices is “transitory” as the economy gears back up, and previously indicated that it would aim for higher-than-usual inflation—“moderately above” its 2% target—for “some time” to help rebuild the economy from the pandemic. Consumers’ expected inflation numbers for both the year ahead and in three years are higher than that 2% target and reflect an environment where the prices of many things have increased more rapidly in recent months. In March, the core inflation rate (which excludes volatile food and energy prices) jumped to 1.8%, the highest level since February 2020, according to Bureau of Economic Analysis data. Toilet paper shot up 16.3% in the last year, and other consumer products have posted similar increases, with manufacturers saying materials are more expensive and harder to obtain. Federal Reserve chair Jerome Powell acknowledged in late April that inflation has increased, but said the Fed is not concerned just yet, as the economy’s recovery from the pandemic is “uneven and far from complete.” Survey respondents, looking at a frenzied real estate market, said they expect home prices to increase 5.5% in the next year, up from 4.8% in March and a new series high. They also increased how much they think rent will go up this year, with an expected rise of 9.5%, up from 9.3% in March. That’s the fifth consecutive increase in expected rent prices and another new series high. The New York Fed’s Survey of Consumer Expectations is a nationally representative, internet-based survey of about 1,300 heads of household. Respondents participate in the panel on a rotating basis for up to 12 months.
