US Inflation Level Expectations Remain at Record High

US consumer inflation expectations for the year ahead remained at a record 6% in December of 2021, the same as in November.

Home price expectations rose to 5.5% from 5% in November but remained below their May 2021 peak. Also, uncertainty and disagreement about future inflation decreased and expectations about year-ahead price changes fell by 3.5 percentage points for the price of gas (to 5.7%), 1.4 percentage points for food (to 7.8%), and 1.0 percentage point for the cost of college education (to 8.1%).

Simultaneously, households reported increased optimism about their labour market prospects, with earnings growth, job loss, and job finding expectations all improving.

Households’ income growth expectations also improved, rising to a new series high. Meanwhile, the medium-term three-year inflation expectations were also steady at 4% according to the Federal Reserve Bank of New York.