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Inflation expectations climb in US, Americans predict 4.5% rise in 2024

Americans expect prices will climb at an annual rate of 4.5% over the next year, up from the 4.4% expected earlier in the month, according to the final November reading from the University of Michigan

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A customer shops for produce in San Rafael, California. (Photo:Bloomberg/Getty Images)

Bloomberg

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By Reade Pickert

US short-term inflation expectations climbed to a seven-month high in November and longer-run price views remained at levels not seen since 2011.
 
Americans expect prices will climb at an annual rate of 4.5% over the next year, up from the 4.4% expected earlier in the month, according to the final November reading from the University of Michigan. They see costs rising 3.2% over the next five to 10 years, data Wednesday showed.
 

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“Consumers appear worried that the softening of inflation could reverse in the months and years ahead,” Joanne Hsu, director of the survey, said in a statement.
 

“Despite easing prices at the pump, one-year gas price expectations rose to its highest reading since June 2022, and five-year gas price expectations are their highest since March 2022,” Hsu said.

Treasury yields climbed and the dollar strengthened following the report, while the S&P 500 advanced.

The University of Michigan’s consumer sentiment index improved from the previously reported figure, to 61.3 on brighter views of their finances. The median estimate in a Bloomberg survey of economists called for a reading of 61.

However, the gauge is sitting at a six-month low as views about the short- and long-term economic outlook worsened from October.

Earlier this month, Federal Reserve Chair Jerome Powell was asked how an elevated year-ahead inflation reading would impact the central bank’s December rate decision.

Despite the statistic playing a major role in a decision to raise interest rates last year, Powell emphasized inflation expectations are in a “good place” and that the committee looks at a “range of things.”

Buying conditions for durable goods improved from earlier in the month, likely reflecting some discounting of merchandise for the holiday-shopping season. Consumers’ perception of their current and future financial situation increased from earlier in the month.

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First Published: Nov 22 2023 | 10:59 PM IST

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