Survey: Consumers expect inflation to jump by nearly 5% in short term

July 12 (UPI) -- U.S. households expect inflation will significantly worsen during the next 12 months, according to a survey released Monday by the Federal Reserve Bank of New York.

Consumers responding to the monthly survey by the New York Fed's Center for Microeconomic Data expected inflation to surge by 4.8% at the one-year horizon -- a sharp increase over the 4% level they expected in May.

It is the highest level of inflation expectations recorded since the survey began in 2013.

Medium-term expectations about inflation remained unchanged at 3.6% at the three-year horizon.

"The increase in the short-term measure was driven mostly by respondents who have some college education," the Fed reported.

The inflation worries are coming despite multiple reassurances by the Federal Reserve that increased prices seen as the economy recovers from the COVID-19 pandemic are temporary.

The core personal consumption expenditures price (PCE) index, which examines changes in the cost of goods and services, climbed at its highest rate since 1992 during May, rising 0.5% to 3.4%.

But Fed officials again said in a report issued last week that the price spikes are "transitory" in nature, citing supply chain disruptions and a shortage of computer chips which have created a bottleneck for some industries.

A rapid rise in lumber costs, meanwhile, have driven up real estate costs.

The Fed's Open Market Committee predicted PCE inflation of 3% in 2021 moderating to 2.1% in subsequent years at their June meeting.

The New York Fed's survey also found consumers expect home prices to continue their acceleration at a 6.2% annual pace, similar to last month, although they also indicated a high level of uncertainty about their expectations.