By Jonnelle Marte
(Reuters) - Short-term inflation expectations increased in October and consumers' expectations for how much money they will earn and spend over the next year rose to the highest level in eight years, according to survey findings released by the New York Federal Reserve on Monday.
Median expectations for what inflation will be one year from now rose in October for the 12th straight month to 5.7% from 5.3% in September, reaching a new high for the survey launched in June of 2013. However, medium-term inflation expectations for what inflation will be in three years remained unchanged in October at 4.2% after three consecutive months of increases.
Consumers said they expected household income to grow by a median of 3.3% in one year, up from 3.0% in September and reaching a series high. Expectations for how much more consumers expect to spend a year from now rose to 5.4% in October from 5.0% the previous month, also reaching a new high.
The report provided more evidence of the ways that imbalances caused by the pandemic may be leading to inflationary pressures and wage growth. Fed policymakers said last week that they largely expect those pressures to fade on their own as those supply and demand imbalances are resolved, but they are watching the data closely for signs that they may persist.
The median expectations for the year-ahead change in the price of gas rose sharply to 9.4% in October from 5.9% in September, the survey found. Consumers also said they expect further increases in the cost of college, food and rent.
The monthly survey of consumer expectations is based on a rotating panel of approximately 1,300 households.