Overview
- The New York Fed’s June Survey of Consumer Expectations, published Tuesday, showed median one-year inflation expectations climbed to 3.7%.
- Consumers raised their three-year inflation outlook to 3.3%, the highest since June 2022, signaling that many expect elevated prices to last beyond the next year.
- Respondents singled out medical care and rent as the biggest near-term pressures, forecasting medical costs up 9.4% and rent up 8.3% over the next year.
- Expectations for fuel fell to their lowest since August 2022, while markets and prediction markets moved to price a higher near-term CPI, with about a 51% probability assigned to a 3.8% annual inflation outcome.
- Policy and pocketbook stakes are rising because late-June PCE data showed a renewed pickup in headline inflation and the end of enhanced premium tax credits is pressuring healthcare costs, so the July 14 CPI release could prompt investors and the Fed to revise plans for interest-rate moves.