Median five-year ahead inflation expectations, which have been elicited in the monthly SCE core survey on an ad-hoc basis since the beginning of this year, also declined to 2.3 per cent from 2.8 per cent in June, the Federal Reserve Bank of New York said in a press release. After being stable at 3.0 per cent during the first three months of the year, the series has been trending down since. Disagreement across respondents in their five-year ahead inflation expectations remained unchanged in July.

Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—declined slightly at both the one- and three-year-ahead horizons. Uncertainty at the five-year-ahead horizon decreased more substantially.

Expectations about year-ahead price changes decreased sharply by 4.2 percentage points for gas (to 1.5 per cent) and by 2.5 percentage points for food (to 6.7 per cent). The decrease in expected gas price growth was the second largest in the series, just below the 4.5 percentage point decline in April of this year. The decline in food price growth expectations was the largest observed since the beginning of the series in June 2013. There were smaller declines in expectations about year-ahead changes in rent (from 10.3 per cent to 9.9 per cent), medical care (from 9.5 per cent to 9.2 per cent), and college education (from 8.7 per cent to 8.4 per cent), added the release.

The SCE is a nationally representative, internet-based survey of a rotating panel of approximately 1,300 household heads. It contains information about how consumers expect overall inflation and prices for food, gas, housing, and education to behave.

Fibre2Fashion News Desk (NB)