Consumer inflation outlook slips below record levels, Fed survey shows

Consumers turned slightly more optimistic about inflation in April, although they still expect to spend significantly more in the coming year, a Federal Reserve survey released on Monday shows.

Inflation expectations for next year fell to a median of 6.3%, down 0.3 percentage point from March’s record high, according to data dating back to June 2013. On a three-year basis, expectations increased by 0.2 percentage points to 3.9%. , which is itself 0.3 percentage points behind the record.

The data comes with March 12-month inflation at 8.5%, the highest since December 1981. April consumer prices are due to be reported on Wednesday.

In response to the rise in prices, the Fed raised interest rates by half a percentage point last week, the largest hike in 22 years and the second hike of the year.

“We have our job to do and we have to bring inflation back down,” Minneapolis Fed President Neel Kashkari told CNBC’s Squawk Box in an interview Monday morning.

Americans are still wary of the high cost of living. According to the New York Fed survey, household spending is expected to increase by 8% next year. That’s up 0.3 percentage points from the previous month and another series high.

However, there was also some optimism as consumer expectations for gas price increases fell to 5.2%, a 4.4 percentage point drop that came as oil prices eased slightly in April. Respondents also became more secure in their job, with just 10.8% expecting to lose their job in the next 12 months, an all-time low.

Expectations for house prices remained unchanged, but the expected 6% increase is still above the long-term average.