MNI BRIEF: 3Y Inflation Expectations Highest In 3Yrs - NY Fed

The New York Fed's survey-based measure of year-ahead and three-year-ahead inflation expectations increased in April, while the five-year-ahead measure dipped 0.12 pp to 2.74%. The year-ahead measure, up 0.05 pp to 3.63%, was the highest since September 2023 and the three-year-ahead measure, up 0.17 pp to 3.17%, was the highest since July 2022. 

The survey’s measure of disagreement across respondents also increased at the one- and three-year horizons and decreased slightly at the five-year horizon. Median home price growth expectations rose by 0.3 pp to 3.3%. Year-ahead commodity price expectations increased by 0.3 pp for the price of gas to 3.5%, and 0.8 pp for the cost of medical care to 8.7%. 

Fed officials are paying close attention to inflation expectations and are keen to see that longer run expectations remain anchored. (See: MNI INTERVIEW: Fed Should Show Resolve, Wait To Cut - English) 

Households also expect lower income growth over the next year, and their perceptions about both their current financial situation and their outlook for their financial situation one year from now deteriorated sharply. Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now — increased by 0.1 pp to 44.1%, the measure’s highest reading since April 2020.

The survey was fielded from April 1 through April 30.