US consumers’ short-term inflation expectations ease in May

US consumers’ short-term inflation expectations eased slightly in May, while medium- and longer-term views remained stable, the Federal Reserve Bank of New York said Monday.

Median inflation expectations for the year ahead declined to 3.5% in May from 3.6% in April, according to the New York Fed’s Survey of Consumer Expectations.

Inflation expectations at the three-year horizon were unchanged at 3.1%, while five-year-ahead expectations held steady at 3.0%, indicating that longer-term inflation views remained broadly anchored.

The survey also showed a firmer outlook for home prices. Median year-ahead home price growth expectations rose to 3.5%, the highest level since 2022.

Commodity price expectations were mixed. Median year-ahead gasoline price growth expectations edged down to 5.0%, from 5.1% in April.

The report also pointed to weaker household financial sentiment. Consumers’ views on their financial outlook deteriorated to the lowest level since 2022, suggesting increased caution about household finances despite the modest easing in near-term inflation expectations.

Labor market expectations were mixed, with respondents giving differing signals on unemployment, job loss, and job-finding prospects.

The New York Fed’s Survey of Consumer Expectations tracks household views on inflation, labor market conditions, and household finances. The survey is based on a rotating panel of about 1,300 household heads and has been fielded monthly since 2013.