A worker stores items at a store in San Francisco, California, May 2, 2022.
David Paul Morris Bloomberg | Getty Images
Consumers have become a little more optimistic about inflation in April, although they still expect to spend significantly more next year, according to a Federal Reserve survey released Monday.
Inflation expectations fell to a median of 6.3% next year, down 0.3 percentage points from a record high in March, according to data from June 2013. On a three-year basis, expectations rose 0.2 percent. percentage points to 3.9%, which is only 0.3 percentage points less than the record.
The data comes with 12-month inflation in March of 8.5%, the highest level since December 1981. Consumer prices in April are expected to be released on Wednesday.
Responding to rising prices, the Fed raised reference interest rates by half a percentage point last week, the biggest increase in 22 years and the second increase of the year.
“We have our business and we need to reduce inflation,” Minneapolis Fed President Neel Kashkari told CNBC’s “Squawk Box” in an interview Monday morning.
Americans are still skeptical about the high cost of living. Household spending is projected to grow 8% over the next year, according to a New York Fed survey. That’s an increase of 0.3 percentage points from a month ago and another record in a row.
However, there was some optimism, as consumer expectations of an increase in gas prices fell to 5.2%, down 4.4 percentage points from falling oil prices in April. Respondents also became more confident in their jobs, with only 10.8% expecting to lose their jobs in the next 12 months, the lowest value of all time.
Expectations for real estate prices remained unchanged, but the expected increase of 6% is still higher than the long-term average.