Americans expect stuff to get a lot pricier.
Why it matters: Even though inflation may not actually rise to expected levels, the expectations alone can affect behavior.
- “Some research shows when consumers expect higher inflation they pull back on spending,” MacroPolicy Perspectives founder Julia Coronado said.
By the numbers: According to the New York Fed’s August Survey of Consumer Expectations, respondents see the rate of inflation rising to 5.2% a year from now, up from 4.9% in last month’s survey.
- Three years from now, the inflation rate is expected to be 4.0%, up from 3.7% last month.
- Both figures represent the highest readings since the survey began in 2013.
State of play: Business anecdotes continue to confirm that inflation remains a challenge.
- “Unfortunately, inflation is higher than we even thought in the third quarter,” 3M CFO Monish Patolawala said at a Morgan Stanley conference on Monday. “Despite taking price up … we are seeing inflation outstrip price.”
What to watch: The August Consumer Price Index report, which will be published at 8:30 ET this morning, will give a fresh update on what inflation looks like today.