- Consumer expectations for long-term inflation dropped to the lowest level since July 2021.
- Over the next five to 10 years, consumers sees prices rising by 2.8% annually, the University of Michigan survey found.
Long-term inflation expectations in the US fell to the lowest level since July 2021, according to data out Friday from the University of Michigan's consumer sentiment index.
Consumers see inflation growing at an annual clip of 2.8% for the next five to 10 years, the report said. Consumers also expect prices to climb by 4.6% over the next year, which is the lowest rate since September last year.
Inflation edged down to 8.3% in August from 8.5% in July, but is still near 40-year highs and well above the central bank's target of 2%.
The latest slate of data is a welcome sign to the Federal Reserve, which is aggressively trying to tame inflation. But policymakers are still expected to hike rate by 75 basis points next week, according to Pantheon Macroeconomics chief economist Ian Shepherdson.
"In one line: Lower gas prices boost confidence and depress inflation expectations," Shepherdson wrote in a report viewed by Insider, adding that "a further dip in expectations in October, coupled with better CPI numbers, means we think the November hike is more likely to be 50 bp."