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Consumers See Inflation Easing

Expectations for price increases over the year ahead fall to the lowest level since April 2021.

By Reade Pickert | January 13, 2023 at 12:35 PM

U.S. short-term inflation expectations fell in early January to the lowest in nearly two years, providing a bigger-than-expected boost to consumer sentiment.

Respondents said they expect prices to advance 4 percent over the next year, the lowest since April 2021, the University of Michigan’s preliminary survey reading showed Friday. The sentiment index rose to a nine-month high of 64.6, from 59.7 at the end of the year, beating all estimates in a Bloomberg survey of economists.

Consumers expect inflation to rise 3 percent over the next 5 to 10 years, a slight uptick from the prior month. The Federal Reserve watches long-term views especially closely, as expectations can become self-fulfilling and lead to higher prices.

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