New York Fed survey shows cooling inflation expectations among US consumers

According to the survey published this week by the Federal Reserve Bank (Fed) of New York, Americans are growing less worried about inflation. Poll data cited by Reuters also indicated improved sentiment among US citizens on their financial wellbeing last month.

The May report shows a broad decline in price growth forecasts across all time horizons, suggesting consumers are gaining confidence in the economic outlook. US inflation is projected at 3.2% in 2026, down from April's 3.6% forecast. The rate may further drop to 3% in three years and 2.6% over a five-year horizon.

The survey reveals diverging price trends: while gas, rent, healthcare, and education costs are expected to rise moderately, food prices are likely to surge 5.5% next year, thus marking the highest annual increase since October 2023.

Softer inflation forecasts emerge as trade policy risks loom. Reuters-polled analysts suggest Trump’s tariffs may create conflicting pressures—potentially elevating consumer prices while suppressing labor market gains.