Consumers are less concerned about inflation and are feeling a little better about their finances, according to survey data released Tuesday by the Federal Reserve Bank of New York’s Center for Microeconomic Data.
The June edition of the Survey of Consumer Expectations revealed that median expectations for the year-ahead inflation rate decreased to 3% last month from 3.2% in May. Three-year inflation expectations of 3% and five-year expectations of 2.6% inflation were unchanged from May’s survey.
The latest personal consumption expenditures (PCE) price index data released June 27 showed that overall inflation increased to 2.3% in May compared to a year ago and core inflation excluding food and energy prices rose to 2.7%. The Federal Reserve’s monetary policy committee looks closely at PCE inflation when setting interest-rate policy and aims to achieve 2% inflation over the long run.
Despite the improved consumer inflation expectations, the New York Fed’s consumer survey showed that median household spending growth expectations over the next 12 months declined by 0.2% in June to 4.8%.
Meanwhile, the median expected growth in household income over the next year increased 20 basis points to 2.9% in June, equaling its 12-month trailing average. That metric hit a four-year low of 2.6% in April amid widespread uncertainty over the impacts of the Trump administration’s “Liberation Day” tariff announcement.
