US inflation outlook falls to two-year low

U.S. inflation expectations for the next 12 months fell to the lowest level since May 2021, according to a New York Fed survey. Consumers are increasingly optimistic that inflation is on track to decline, according to a survey released Monday by the New York Fed. The Federal Reserve’s May Survey of Consumer Expectations showed that one-year inflation expectations fell 0.3 percentage points to 4.1%. U.S. inflation expectations for the next 12 months fell to the lowest level since May 2021. Median long-term inflation expectations rose slightly. Respondents raised their expectations for three-year inflation to 3.0% from 2.9%. Five-year inflation expectations rose to 2.7% from 2.6%. Some of the rise in inflation was fueled by an acceleration in wages, and the survey showed that outlook there has also softened. One-year expected earnings growth has slowed to 2.8%, down 0.2 percentage points since April and in line with the overall range since September 2021.