Americans say inflation will keep cooling in the year ahead, according to Monday data offering another sign of a brightening consumer mood.
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 New York 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 move lower over three- and five-year time frames. 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 U.S. inflation. The Bureau of Labor Statistics will release December’s inflation rates Thursday morning.
During November, Labor Department data showed the cost of living in November was up 0.1% from October, but the one-year inflation rate cooled to 3.1% from 3.2%.
Inflation was running at four-decade highs in 2022.
Inflation expectations are important because they hint at the price increases people think will be coming. But they also point to people’s moods about the economy and what they and are willing to absorb.
In December, consumer confidence jumped to a five-month high, according to the Conference Board.
The newly released New York Fed survey also asked participants what their household financial situation would look like a year from now.
Compared with November, more people said their financial situation would be better and fewer people said it would deteriorate.
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