The increase in short-term expectations was broad-based across age, education, and income groups, according to the report. Inflation also pushed the one-year outlook for household spending and rent growth to new highs in data going back to 2013.
The data suggest that consumers anticipate more pain from current wave of high inflation before it eases. They expect home prices to rise 6% over the coming year — up from 5.7% in February. Expectations for year-ahead rent growth edged up to 10.2%, while food prices are now expected to increase by 9.6%.
The share of respondents expecting unemployment to be higher in a year’s time than it is now also increased, to the most since February 2021. Consumers also see a greater risk of losing their jobs, and a lower probability of finding a new one if that happens.
Respondents also anticipate more stress on household budgets. The average perceived probability of missing a minimum debt payment over the next three months increased by 1.9 percentage points to 11.1%, above its 12-month trailing average of 10%. And more respondents reported being worse off financially than they were a year ago.
The Federal Reserve last month started what is expected to be a series of interest rate hikes to tame inflation.
“It will take some time to get inflation down,” Loretta Mester, president of the Federal Reserve Bank of Cleveland, said on CBS’s Face the Nation on Sunday. “Inflation will remain above 2% this year and even next year, but the trajectory will be that it’ll be moving down.”
Consumer prices probably rose 8.4% last month from a year earlier, according to a Bloomberg survey of economists ahead of data due Tuesday. That would be the fastest annual rate since early 1982, reflecting higher energy costs in the wake of Russia’s invasion of Ukraine. The projected monthly price-increase of 1.2% would be the sharpest since 2005.
Economists surveyed by Bloomberg expect consumer-price inflation of 6.9% this year, falling to 2.9% in 2023.
–With assistance from Tony Czuczka.