US Inflation Expectations Slow Amid Slightly Lower Prices Ahead

US inflation expectations have cooled off slightly, with consumers anticipating a lower increase in prices over the next year. The median one-year-ahead inflation expectation dropped to 3.6% in July from 3.7% in June, which was the highest since September 2023.

The decrease in inflation expectations was seen across various categories, including medical care, which dropped by 0.5 percentage points to 8.9%, and rent, which decreased by 2.4 percentage points to 5.9%. However, consumers expect prices to rise faster for gas and college education.

Median earnings growth expectations remained steady at 2.8%, while household spending growth expectations dipped slightly to 4.9%. Unemployment expectations increased by 1.1 percentage points to 42.8%.