Long-term inflation expectations increased to the highest level in six months in February, according to the New York Federal Reserve, as more consumers worry that elevated prices may linger.
Expectations for price growth at the three and five-year horizons increased by 0.3 and 0.4 percentage points to 2.7 and 2.9 per cent, respectively, according to the bank’s survey of consumer expectations.
The rise in the expected three-year inflation rate was the highest level since November, while year-ahead inflation expectations remained unchanged at 3 per cent.
Although inflation has slowed in recent months, January’s consumer price index report showed price growth for services has remained sticky. Housing, medical care, and vehicle insurance all contributed to price pressures in January.
The report also showed that perceptions about household’s current financial situation deteriorated. Fewer respondents reported being better off than a year ago as the perceived likelihood of finding a new role after a job loss declined.
