May 9 (UPI) — U.S. consumers’ expectations about how quickly inflation will rise in the next 12 months have moderated but their longer-term sentiment has worsened, a Federal Reserve survey showed Monday.
Consumers’ median one-year inflation expectations fell to 6.3% in April, down from the 6.6% recorded in March’s Survey of Consumer Expectations compiled by the Federal Reserve Bank of New York’s Center for Microeconomic Data.
Americans, however, showed more pessimism about the three-year horizon for inflation, where their expectations rose by 0.2 percentage point to 3.9%.
While still quite elevated by historical standards, both the near-term and long-term inflation expectations have dropped by 0.3% from their all-time highs, the Fed reported.
Inflation accelerated to 8.5% in March, the highest since December 1981. Excluding the volatile food and energy sectors, “core” inflation rose by 6.5%, marking the biggest 12-month change since August 1982.
The Federal Reserve last week took a major step against surging inflation by instituting a half-point interest rate hike — its highest such hike in decades.
Fears of continued inflation and further rate hikes sparked a major stock market sell-off that began last week and continued into Monday.
Consumers surveyed by the New York Fed expressed unchanged expectations about home prices in the coming year, which they felt would rise by 6%, but they voiced significantly more optimism about food and energy prices.
Inflation expectations for gas prices fell sharply from 9.6% in March to 5.2% in April, while the expected change in the price of food fell by 0.2% to 9.4%.