Friday 14 October 2022 09:01 PM Consumer expectations for inflation are rising in troubling sign for the Fed trends now
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Consumer expectations for inflation rose this month for the first time since March, in a troubling sign that Americans are losing faith in the Federal Reserve's ability to control soaring prices.
The University of Michigan's preliminary survey on Friday showed one-year inflation expectations rose to 5.1 percent this month, up from 4.7 percent in September.
The survey's five-year inflation outlook increased to 2.9 percent from 2.7 percent last month.
Inflation expectations are significant because they impact wage negotiations, and higher expectations can fuel higher prices in a self-fulfilling prophecy known as a 'wage-price spiral.'
Fed policymakers carefully monitor the UMich poll for signs that expectations are becoming unanchored, a shift that makes inflation much more costly and difficult to bring down.
Consumer expectations for inflation rose this month for the first time since March, a sign that Americans are losing faith in the Fed's fight against inflation. Fed Chair Jerome Powell is pictured in September
Core inflation, which excludes volatile food and energy prices, rose 6.6% in September from a year ago, a 40-year high, while total inflation rose 8.2%
Minutes from the Fed's September meeting indicate that officials do not believe at wage–price spiral has developed yet, but that several 'cited
