Last month, one-year inflation expectations in the NY Fed's September Survey of Consumer Expectations jumped to the highest since May 2023. This month, they just sat there, waiting for the next catalyst.
According to the October survey released by the New York Fed on Monday, median inflation expectations were unchanged at all three horizons: 3.9% one year ahead (3.91% to be precise, a hair above September's 3.90% and above the 3.8% consensus), 3.3% three years ahead (technically up from 3.25% to 3.29%, which rounds to "unchanged"), and 3.0% five years ahead, where the series has now been parked for the 14th month in a row. If the Fed wanted proof that long-run expectations are "anchored," well, here it is. Just one problem: the anchor sits a full point above the Fed's 2% target.
The survey also showed that disagreement across respondents (the gap between the 75th and 25th percentiles) narrowed at the one- and five-year horizons, while inflation uncertainty eased at the one- and three-year horizons. In other words, consumers are increasingly confident that inflation will stay where it is: around 4%.
Under the hood, the commodity mix shifted. Thanks to cheaper gasoline, expected gas price inflation dropped 0.6pp to 4.2%, food was unchanged at 5.5%, medical care rose 0.1pp to 9.3% and college tuition rose 0.1pp to 7.6%. The big mover was rent, where expected year-ahead increases jumped 0.9pp to 7.7%, up mor
