US consumer short-term inflation expectations rise to 3.4%, the largest increase in a year.

Short-term inflation expectations among American consumers have risen significantly, reflecting a resurgence of inflationary pressures. According to the monthly consumer expectation survey released by the New York Fed on Tuesday, the median expectation for inflation over the next year in the United States rose to 3.4% in March, an increase of 0.4 percentage points from February, marking the largest increase in a year. At the same time, the three-year inflation expectation slightly increased to 3.1%, while the five-year inflation expectation remained at 3%. The survey, conducted from March 2 to March 31, coincided with the escalation of geopolitical tensions as the US conducted military actions against Iran. The increase in energy prices became one of the main factors driving up inflation expectations. The survey showed that consumers expect gasoline prices to rise by 9.4% in the next year, a significant increase of 5.3 percentage points from before the conflict, reaching the highest level since March 2022; food prices are expected to rise by 6%, an increase of 0.7 percentage points from February. While inflationary pressures intensify, expectations for household financial conditions have deteriorated significantly. More respondents indicated that their current financial situation is worse than a year ago, and the proportion of households expecting further deterioration in financial conditions in the next year has reached the highest level since April 2025, indicating consumer confidence is under pressure. In terms of employment prospects, consumer perceptions are mixed. On one hand, respondents believe there is an increased probability of the unemployment rate rising in the next year, and concerns about their own risk of unemployment have also increased. On the other hand, confidence in finding a new job after unemployment has improved, reflecting a certain resilience in the labor market. At the policy level, the Federal Reserve has maintained interest rates unchanged this year, with several officials stating that the current policy level is helping to strike a balance between inflation and employment. The latest data shows that US job growth rebounded in March after a sharp slowdown in February. However, some officials who hold a more cautious stance on inflation believe that if inflation remains above the 2% target, the Federal Reserve may need to consider further tightening of policy. However, overall, this hawkish view remains a minority among policymakers. The market generally expects the Federal Reserve to keep interest rates steady this year, as reflected in the pricing of federal funds rate futures. The market will now focus on the upcoming release of the Personal Consumption Expenditures (PCE) price index, which is one of the most important inflation indicators for the Federal Reserve. Its performance will provide crucial guidance for future policy decisions.