Americans say inflation rates will keep cooling in the year ahead, according to Monday data offering another sign of a brightening mood on inflation.
Looking ahead one year, consumers expect the inflation rate to fall to 3%, according to the Federal Reserve Bank of New York.
That’s the lowest anticipated one-year ahead inflation rate since January 2021, in the NY Fed’s ongoing survey of consumer expectations. The expectation of a 3% rate was down from 3.4% in November’s survey and down from 5% a year ago.
Consumers also expected inflation rates to drop three years and in five years. The last time inflation expectations fell in the survey’s one-, three- and five-year categories was in July 2023.
The numbers come days ahead of the next read on inflation rates. The Bureau of Labor Statistics will release December’s inflation rates on Thursday morning.
During November, Labor Department data showed the cost of living in November rose 0.1% from October, but the yearly rate cooled to 3.1% from 3.2%.
Inflation rates hit four-decade highs in 2022.
Inflation expectations are important because they hint at the price increases people think coming be coming and are willing to pay. But they also point at people’s mood about the economy.
In December, consumer confidence jumped to a five-month high, according to the Conference Board.
Monday’s New York Fed survey also asked participants what their household financial situation would look like a year from now.
Compared to November, more people said their financial situation would be better and fewer people said it would deteriorate.
