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Survey: Consumer expectations on inflation moderated in April

Food prices have contributed to the sharpest spike in inflation since December 1981. File Photo by Bill Greenblatt/UPI | <a href="/News_Photos/lp/0051ff038d6f7ba699bf64c390df5b21/" target="_blank">License Photo</a>
Food prices have contributed to the sharpest spike in inflation since December 1981. File Photo by Bill Greenblatt/UPI | License Photo

May 9 (UPI) -- U.S. consumers' expectations about how quickly inflation will rise in the next 12 months have moderated but their longer-term sentiment has worsened, a Federal Reserve survey showed Monday.

Consumers' median one-year inflation expectations fell to 6.3% in April, down from the 6.6% recorded in March's Survey of Consumer Expectations compiled by the Federal Reserve Bank of New York's Center for Microeconomic Data.

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Americans, however, showed more pessimism about the three-year horizon for inflation, where their expectations rose by 0.2 percentage point to 3.9%.

While still quite elevated by historical standards, both the near-term and long-term inflation expectations have dropped by 0.3% from their all-time highs, the Fed reported.

Inflation accelerated to 8.5% in March, the highest since December 1981. Excluding the volatile food and energy sectors, "core" inflation rose by 6.5%, marking the biggest 12-month change since August 1982.

The Federal Reserve last week took a major step against surging inflation by instituting a half-point interest rate hike -- its highest such hike in decades.

Fears of continued inflation and further rate hikes sparked a major stock market sell-off that began last week and continued into Monday.

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Consumers surveyed by the New York Fed expressed unchanged expectations about home prices in the coming year, which they felt would rise by 6%, but they voiced significantly more optimism about food and energy prices.

Inflation expectations for gas prices fell sharply from 9.6% in March to 5.2% in April, while the expected change in the price of food fell by 0.2% to 9.4%.

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