Americans think inflation in the U.S. is likely to rise 5% in the next year, indicating they don’t expect high prices to fade quickly.
Expectations for inflation in the short term were unchanged from 5% in December, according to a monthly survey of consumers published by the New York Federal Reserve.
Those surveyed see the rate of inflation slowing gradually to 2.7% in three years and to 2.5% in five years.
That would still leave prices rising faster than the Fed’s 2% goal, however.
The increase in inflation has slowed sharply since last summer, but prices are still climbing rapidly. The annual rate of inflation tapered to 6.5% at the end of 2022 from a 40-year peak of 9.1% last June.
The Fed keeps a close eye on the public’s view on the inflation outlook, because future inflation rates tend to mirror expectations. Before the pandemic, inflation was rising less than 2% a year.
The Fed has been raising interest rates to try to curb inflation, but higher borrowing costs also threaten to trigger a recession, Wall Street
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economists say.
Americans expect household-income growth to rise 3.3%, down from 4.6% in the prior month, the New York Fed said. The new reading is still well above prepandemic levels.
