Annual inflation is forecasted to be 5.7% in 12 months, from July’s high of 6.2%, according to the US Central Bank’s most recent Survey of Consumer Expectations. If estimates are correct, the 5.7% number will put inflation at its lowest since October 2021.
The survey also pointed to a three-year inflation expectation of 2.8% due to aggressive interest rate increases by the Federal Reserve. The lower number came from gas prices averaging over $5 a gallon this past summer, then dropping to a current average of $3.71, according to AAA.
Consumers are hoping that gas prices will remain where they now stand. However, food prices are also high and climbing. The possibility of a railroad strike increasing food costs and gas prices sneaking back up will certainly hurt American families.
Housing is always a concern too. Landlords are raising monthly rent to a projected 10% this year.
Since this past summer, 61% of Americans have lived paycheck to paycheck. That is up from 58% this past spring. Citizens are desperate for relief and counting on the Central Bank to act quickly as inflation rates are at a 40-year high.
Even though citizens need relief from the Central Bank, they still think the cost of living will increase.
The combination of housing costs with food is not something that will go away without some time. Bills are piling on as budgets are stretched to their limit; missed minimum credit card payments currently total 12.2% for cardholders.
Finding a positive spin on some of the poor numbers, there is a highlight with employment. The Federal Reserve said Monday that they believe the chances of losing a job in August are lower than in July, and finding a job is higher than in recent months.
Lower gas prices and stable employment are giving the Federal Reserve cautious confidence that inflation may be stabilizing.
If railroad workers do not strike next week, this will help food prices skyrocket. On the other hand, if Fed leaders keep the pedal to the metal with interest rates, the US economy may finally see a turnaround in 2023 since Covid-19 arrived.
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