US Consumers Worry Inflation Will Pick Up Again, UMich Survey Finds

• U.S. consumers' inflation expectations rose for the second consecutive month in November, with households anticipating a 4.5% inflation rate over the next year, up from 4.2% in October and 3.2% in September.
• Over a five-year horizon, consumers expect inflation to average 3.2%, increasing from 3.0% in October to 2.8% in September. This long-term outlook is the highest since 2011 and hasn't been surpassed since 2008 during the financial crisis.
• Despite evidence of a slowdown in actual inflation rates since the summer of 2022, consumers express concerns that the deceleration might reverse in the coming months and years.
• The Federal Reserve is faced with the challenge of managing inflation expectations, as an unanchoring of these expectations could impact consumer behaviour and contribute to further price increases. The divergence in survey results, with the University of Michigan showing rising expectations while other measures indicate moderation, adds complexity to the Fed's decision-making process.

 (Source: Reuters)