The rate of inflation expected by American households climbed in April, the latest signal that the Fed’s progress in bringing down inflation has stalled.
The University of Michigan’s survey of consumer sentiment showed Friday that the expected rate of inflation in the year ahead rose to 3.2 percent in April from 2.9 percent a month earlier. The longer-run expected inflation rate rose to 3.0 percent from 2.8 percent.
Inflation stopped falling in the second half of last year and has accelerated this year. The personal consumption price index rose at an annualized rate of 3.4 percent in the first three months of the year, a big jump from the 1.8 percent recorded in the last quarter of 2023. The core rate of inflation, which excludes food and energy, rose at a 3.7 percent annualized rate, up from two percent at the end of last year.
Consumer sentiment tumbled slightly in April, with the University of Michigan’s index dropping to 77.2 from 79.4 in March. The expectations index declined to 76 from 77.4. The current situation index fell to 79 from 82.5.
“Consumer sentiment continued to plateau and was virtually unchanged for the third month in a row,” said Joanne Hsu, the director fo the survey. “Since January, sentiment has remained remarkably stable within a very narrow 2.5 index point range, well under the 4.8 points necessary for a statistically significant difference in readings.”
Hus added that Republicans posted notable declines in sentiment in April. Democrats and Independents did not.
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