Near-term inflation outlook rises to 3.7%, the highest since September 2023, amid persistent energy price pressures.
US consumers raised their one-year inflation expectations to 3.7% in June, up from 3.5% in May, marking the highest level since September 2023. The New York Fed’s Survey of Consumer Expectations also showed three-year inflation expectations rising to 3.3%, the highest since June 2022, while five-year expectations remained steady at 3.0%.
The increase follows a surge in energy prices driven by Middle East tensions, which pushed the May personal consumption expenditures price index up 4.1% year-over-year. While energy prices have since retreated, near-term inflation concerns persist despite an improved outlook for gasoline prices and personal finances.
Central bank officials closely monitor long-term inflation expectations, which remain anchored at 3.0%. The data suggests lingering uncertainty over inflation’s trajectory despite recent moderation in energy markets.