Americans' inflation fears skyrocketed again in March, with concerns over rising prices hitting the highest level in more than a decade, according to a key Federal Reserve Bank of New York survey published Monday.
The median expectation is that the inflation rate will be up 6.6% one year from now, topping an 11-year-high recorded in February, according to the New York Federal Reserve's Survey of Consumer Expectations, which dates back to 2013. Three years from now, consumers see inflation hitting 3.7% – down slightly from 3.8% the previous month and well below the peak of 4.2% recorded in late 2020.
The survey plays a critical role in determining how Fed policymakers respond to the recent inflation spike. That's because actual inflation depends, at least in part, on what consumers think it will be. It's a sort of self-fulfilling prophecy – if everyone expects prices to rise by 3% in the year, that signals to businesses that they can increase prices by at least 3%. Workers, in turn, will want a 3% pay raise to offset the rising costs.
The survey comes one day before the Labor Department releases the latest consumer price index reading, which is expected to be another doozy. Economists expect the gauge to climb above 8%, hitting a fresh 40-year high. / AP Newsroom)
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