Consumers are more pessimistic and more uncertain about the rate of inflation over the next year than they were a month ago, according to data released Thursday (May 7) by the Federal Reserve Bank of New York.
Households’ inflation expectations at the one-year-ahead horizon increased by 0.2 percentage points to 3.6% in April, the New York Fed said in a Thursday press release.
Their inflation expectations for the three-year-ahead and five-year-ahead horizons were unchanged, at 3.1% and 3%, respectively.
There were also differences in households’ uncertainty regarding future inflation outcomes at the different horizons. At the one-year-ahead horizon, households were more uncertain about the inflation outcome than they were in March. At the three-year-ahead and five-year-ahead horizons, they were less uncertain.
The University of Michigan’s Surveys of Consumers found in its final results for April that year-ahead inflation expectations surged by 0.9 percentage points, from 3.8% in March to 4.7% in April.
Surveys of Consumers Director Joanne Hsu said in the report that this was the largest one-month increase seen in the survey since April 2025.
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“The current reading exceeds those seen in 2024 and remains well above the 2.3% to 3% range seen in the two years pre-pandemic,” Hsu said.
Long-run inflation expectations climbed to 3.5% in April after remaining in the 3.2% to 3.3% range for the previous four months. The April reading for long-run inflation expectations was the highest since October 2025.
“In 2024, values ranged between 2.8% and 3.2%, while in 2019 and 2020, they were consistently below 2.8%,” Hsu said.
The Conference Board said April 28 that consumers’ average and median 12-month inflation expectations inched downward in April but remained elevated.
The PYMNTS Intelligence report “The Next Frontier: Why Embedded B2B Finance Is Breaking Out in 2025” found that 58% of small businesses said inflation was a top financial challenge in 2025.
OppFi CEO, Executive Chairman and founder Todd Schwartz said Thursday that consumer caution caused by inflationary pressures led to an increase in the company’s net charge-offs in the first quarter.
Carvana founder and CEO Ernie Garcia said April 29 that the rising cost of goods and services is impacting people and is leading some to trade down to used cars.
