NY Fed: Inflation Expectations Jump, Driven By Surging Gas

Ahead of Friday’s CPI report, inflation fears are already rising, with the NY Fed’s latest monthly survey of consumer expectations reporting that Inflation expectations at the one-year horizon were higher at 3.42% in March from the previous month’s 3.00%, matching the highest since April ’25. Inflation expectations also increased by 0.1% to 3.1% at the three-year-ahead horizon, and were unchanged at 3.0% at the five-year-ahead horizon in March.

The jump in year-ahead expectations was driven by a surge in gas inflation which rose 5.3% to 9.4%, the highest reading since March 2022.

Other commodity price change expectations also rose, but to a more limited degree: food prices are now expected to rise 6%; medical costs to rise 9.7%; the price of a college education to rise 9%; rent prices to rise 7.1%.

Turning to the labor market, sentiment is deteriorating fast with respondents saying that the mean probability the US unemployment rate will be higher next year rose 3.6% to 43.5%; highest reading since April 2025

On the other end, median one-year-ahead earnings growth expectations decreased by 0.1% point to 2.4% in March, remaining below its 12-month trailing average of 2.6% and at the low end of its range seen since May 2021 of 2.4% to 3.0%.

More bad news: the mean perceived probability of losing one’s job in the next 12 months increased by 0.6 percentage point to 14.4%. The reading remains below the series’ 12-month trailing average of 14.6%. The mean probability of leaving one’s job voluntarily, or the expected quit rate, in the next 12 months also increased by 2.4 percentage points to 18.3%.

The mean perceived probability of finding a job if one’s current job was lost increased by 1.9 percentage points to 45.9%, while remaining below its 12-month trailing average of 47.5%. The increase was broad-based across age, education, and income groups.

Perceptions about households’ current financial situations also deteriorated compared to a year ago, with a larger share of households reporting a worse financial situation and a smaller share reporting a better financial situation.  Year-ahead expectations about households’ financial situations also worsened, with the share of households expecting a worse financial situation at its highest level since April 2025, and a smaller share of households expecting a better financial situation in one year from now.

Perceptions of credit access compared to a year ago improved, with a smaller share of households reporting it is harder to get credit and a larger share of households reporting it is easier to get credit. Expectations for future credit availability slightly deteriorated, with the net share of respondents expecting it will be harder to obtain credit in the year ahead increasing.

The average perceived probability of missing a minimum debt payment over the next three months increased by 0.7 percentage point to 12.3%, remaining below its 12-month trailing average of 13.2%. The increase was most pronounced for respondents above age 60, those with some college education, and those with annual household incomes below $50,000.

And some more Household Finance observations:

• The median expectation regarding a year-ahead change in taxes at current income level decreased by 0.2 percentage point to 3.1%.
• Median year-ahead expected growth in government debt increased by 0.6 percentage point to 9.8%, remaining well above the 12-month trailing average of 7.4%.
• The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months remained unchanged at 24.9%.
• The mean perceived probability that U.S. stock prices will be higher 12 months from now decreased by 1.6 percentage points to 36.3%.

More in the full report from the NY Fed.