NY Fed: Inflation Expectations Jump, Driven By Surging Gas
Why it matters: Higher inflation expectations could influence consumer spending and investment decisions for millions of US households.
- One-year inflation expectations rose to 3.42% in March from 3.00%, matching the highest since April 2025, largely due to a 5.3% surge in gas inflation to 9.4%.
- Three-year-ahead inflation expectations increased by 0.1% to 3.1%, while five-year expectations remained unchanged at 3.0%.
- Other commodity price expectations also rose, with food prices expected to increase by 6%, medical costs by 9.7%, college education by 9%, and rent by 7.1%.
- Labor market sentiment worsened, with the mean probability of the US unemployment rate being higher next year rising 3.6% to 43.5%, the highest since April 2025.
- Median one-year-ahead earnings growth expectations decreased by 0.1% to 2.4%, remaining at the low end of its range since May 2021.
- Perceived probability of losing one’s job increased by 0.6 percentage points to 14.4%, and the expected quit rate rose by 2.4 percentage points to 18.3%.
- Households' current financial situations deteriorated, with the share expecting a worse financial situation in one year reaching its highest level since April 2025.
- Perceptions of current credit access improved, but expectations for future credit availability slightly worsened, with more respondents expecting it will be harder to obtain credit.
Inflation expectations surged in March, primarily driven by a significant jump in gas prices, according to the NY Fed's latest survey. This rise in anticipated inflation, particularly for the one-year horizon, coincides with a deteriorating outlook on the labor market and household financial situations, signaling growing consumer unease.
