A Sheetz customer receives gasoline at a gas station in Plains, Pennsylvania, the United States, Oct. 19, 2022.
Aimee Dilger | Portal
Americans grew concerned about inflation in October, amid fears of an expected spike in gas prices, a Federal Reserve poll showed on Monday.
Inflation expectations for the coming year rose half a percentage point from September to 5.9%, the highest level since July, according to the New York Fed’s monthly consumer expectations survey. Three-year expectations also accelerated to 3.1%, while five-year expectations rose to 2.4%, up 2.9% and 2.2% respectively.
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The root of heightened concerns was an expected increase in prices at the pump, which have been falling over the past month.
Respondents expect gas prices to rise 4.8% next year, up from 0.5% in September for the largest one-month increase in survey data, which dates back to June 2013.
The forecast for food prices for the coming year increased, with consumers now expecting a rise of 7.6% compared to 6.8% in September. The outlook for medical expenses and rent was little changed, the latter rising 0.1 percentage point, while expectations for college expenses fell to 8.6%, down 0.4 percentage point from September.
The survey comes less than a week after the Bureau of Labor Statistics reported that inflation, as measured by the CPI, rose 0.4% in October. That was less than the Dow Jones estimate of 0.6% for monthly earnings, while the 7.7% annual increase was half a percentage point lower than the previous month.
Fed policymakers have raised interest rates aggressively this year in a bid to lower inflation. A series of hikes have lifted the central bank’s interest rate by about 3.75 percentage points, with markets expecting further hikes into early 2023.
The hikes have already had some impact, particularly in the housing market, where 30-year mortgage rates of around 7% have impacted sales and prices.
Home prices were expected to rise 2%, just like in September, and hit their lowest level since June 2020.
The Fed’s efforts to cool down the red-hot labor market should also have some impact. Around 42.9% of respondents expect the unemployment rate to rise in a year, marking the highest level since April 2020.
However, the survey showed a median expectation for household income of 4.3% next year, a record level. Spending growth rose a full percentage point to 7%.
Credit is expected to become harder to get – a record high 56.7% believes it will be harder to get financing a year from now.
A separate gauge released Monday from the quarterly Survey of Professional Forecasters also pointed to higher inflation coupled with lower economic growth. The survey sees GDP growth of just 1.6% this year and 1.3% in 2023, while CPI inflation is forecast at 7.7% in 2022 and 3.4% in 2023, versus previous estimates 7.5% and 3.2%, respectively.