Inflation fears hit record high in June, warns NY Fed


Americans recently polled by the Federal Reserve Bank of New York said they see inflation rising to 4.8 percent over the next 12 months, a survey record.

The Fed’s Consumer Expectations study, which samples a rotating panel of 1,300 households, showed that Americans in June predicted a median 12-month inflation rate of 4.8 percent, up 0.8 percentage points since May, as costs soared on everything from big ticket items to groceries.

Its the highest inflation expectation reported since the NY branch of the central bank kicked off the series seven years ago.

Americans told the NY Fed that they see a median inflation rate of 3.6 percent over the next three years — unchanged from May but still well above the 2 percent inflation rate needed to maintain a healthy economy.

Gas prices are displayed at a Chevron station on June 14, 2021 in Los Angeles, California. The average price for a gallon of gasoline continues to rise amid inflation fears with the current rate of regular grade up to $3.13 nationwide. In California, the average price is now over $4.00.
Rising prices of goods like gas and food are causing Americans to worry about prolonged inflation.
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Americans’ inflation fears soared in tandem with surging costs, which jumped 5 percent in May from a year earlier as measured by the Labor Department’s Consumer Price Index — the CPI’s biggest jump since 2008.

The Federal Reserve has tools to combat inflation, but has so far held off on raising interest rates because Fed officials see the problem as “transitory.”

Fed chairman Jerome Powell, for example, has predicted that the bump in costs will fade as the supply of goods and services that were hampered due to the pandemic ramps up again.

The NY Fed survey showed that Americans in June said they expect the price of homes to continue rising over the next year by 6.2 percent. That is flat compared with May, but still much higher than last year’s average of 3.7 percent.

The survey also showed that Americans see the cost of medical care, college and rent continuing to rise, while predicting the prices of commodities like gold, gasoline and food, could dip slightly.

Inflation has been a hot-button issue as the economy struggles to rebound from its pandemic slumber. If left unchecked, rising costs could bring the economy’s recovery to a screeching halt, further hampering jobs growth.

Customers shop for produce at a supermarket on June 10, 2021 in Chicago, Illinois. Inflation rose 5% in the 12-month period ending in May, the biggest jump since August 2008. Food prices rose 2.2 percent for the same period.
Americans expect that the inflation rate will be up 4.8 percent one year from now, according to a June study from the New York Federal Reserve.
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The unemployment rate has moderated in recent months to 5.9 percent, but 9.5 million Americans are still out of work, according to the US Bureau of Labor Statistics.

Consumers surveyed by the NY Fed reported growing confidence in the jobs market, however. The average person surveyed who said they see the US unemployment rate rising a year from now dropped to a low of 30.7 percent in June, down from 31.9 percent in May.

More inflation indicators are coming this week with the June consumer price index to be released on Tuesday.

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