By Michael S. Derby
NEW YORK (Reuters) - NEW YORK, Feb 13 (Reuters) - Americans in January continued to expect high near-term inflation pressures and more modest ones on a longer-term basis, as they trimmed their expectations for future income gains, the New York Federal Reserve said on Monday.
Respondents to the regional Fed bank's latest Survey of Consumer Expectations said they expected inflation one year from now to hold steady at 5%. The expected level of inflation three years from now stood at 2.7%, down from an expectation of 3.0% in December, while inflation five years from now was projected to be 2.5%, versus 2.4% in the prior month.
Fed officials pay close attention to this data because they believe that where the public expects inflation to go strongly influences where it stands today. The projected future path of inflation still remains well above the U.S. central bank's 2% target, as policymakers press forward aggressively with interest rate rises aimed at combating high inflation pressures.
On Tuesday, economists expect the government to report that the Consumer Price Index in January rose 6.2% from the same month in 2022, a slight moderation from the 6.5% year-over-year rise in December.
The New York Fed said in its report that the expected rise in home prices slowed last month and hit its second-lowest reading since May 2020. Respondents projected higher food and energy costs, while they saw steady future gains for rent and medical costs.
The survey also found that respondents in January saw expected future household earnings growth at 3.3%, down from the expected 4.6% rise in the prior month. The New York Fed noted this was the biggest one-month drop ever for this measure. Meanwhile, expected future spending growth moderated to 5.7% last month, from the 5.9% forecast in December.
(This story has been officially corrected to change New York Fed's December three-year ahead inflation expectation figure to 3% in paragraph 2)