Inflation expectations by U.S. households rose in April, the latest sign that the Fed’s progress in curbing inflation is stalling.
Expected inflation over the next year was 3.2% in April, up from 2.9% the previous month, according to a consumer sentiment survey released Friday by the University of Michigan. The long-term expected inflation rate rose from 2.8% to 3.0%.
Inflation stopped falling in the second half of last year and accelerated this year. The personal consumption price index rose at an annual rate of 3.4% in the first three months of this year, up sharply from 1.8% in the final quarter of 2023. Core inflation, which excludes food and energy, rose. The annual rate was 3.7%, up from 2% at the end of last year.
Consumer sentiment declined slightly in April, with the University of Michigan’s index dropping to 77.2 from 79.4 in March. The expectation index fell from 77.4 to 76. The current situation index fell from 82.5 to 79.
“Consumer sentiment remains flat, virtually unchanged for the third month in a row,” said research director Joan Hsu. “Since January, sentiment has remained remarkably stable within a very narrow 2.5 index point range, well below the 4.8 points needed for a statistically significant difference in the readings.”
Huss added that Republican sentiment declined noticeably in April. Democrats and independents did not.
