Consumer inflation expectations remained stable at both the short- and longer-term horizons in July, but the medium-term outlook experienced a significant decline, according to the latest data from the New York Federal Reserve Bank. The report highlights a sharp drop in three-year-ahead inflation expectations, which fell to a new series low.
Short Term: In July, the median one-year-ahead inflation expectations remained unchanged at 3.0%, consistent with the levels observed in January, February, March, and June. This figure represents the lowest level since December 2020, signaling a steady short-term outlook for inflation.
- Longer-term expectations, measured by the five-year-ahead outlook, also held steady at 2.8%, showing little movement in consumer sentiment regarding inflation over a more extended period.
Record Low: The report’s most notable finding was the sharp decline in the three-year-ahead inflation expectations. These expectations dropped by 0.6 percentage points to 2.3%, marking a series low since the survey’s inception in June 2013. This unexpected drop suggests that consumers are becoming more optimistic about inflation moderating in the medium term.
Housing: The report noted that median home price growth expectations were unchanged at 3.0% in July, indicating stable expectations for housing market appreciation.
