Most Americans Don't Expect Fed To Bring Inflation Down To 2% Anytime Soon: Survey

Americans expect inflation to be at 5% one year ahead.

That's the lowest reading since July 2021, and down by 0.2% from November, according to a December New York Fed survey.

Inflation expectations have been down month-over-month in six out of the seven last months since June when consumer prices reached their peak inflation of 9.1%.

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The nationally-representative panel of about 1,300 household heads believes that inflation will continue to rise above its ideal level three years from now, at 3%.

The Fed is pushing hard on tightening monetary policies to reach a sweet spot of 2% inflation annually.

The latest consumer price index for December — showing official inflation levels — will be released on Thursday by the Labor Department. The results will inform the Fed of its upcoming effort to raise interest rates on Feb. 1, in a hike expected to be of 0.25%.

For the five-year time frame, respondents expect inflation to be at 2.4%, slightly higher than in the last survey.

The expectation for gas price inflation was amongst the largest decliners in the one-year category. 

Respondents now expect gas prices to rise at a lower rate than overall consumer goods, by only 4.1%. Food prices, on the other hand, are expected to rise by 7.6% and rent prices by 9.6%.

Photo by engin akyurt on Unsplash.