A woman shops in a supermarket as rising inflation affects consumer prices in Los Angeles, California, June 13, 2022.

Lucy Nicholson | Reuters

Consumers’ inflation expectations over the next year hit record highs, though the outlook over the longer term grew a little more optimistic, according to a survey Monday from the New York Federal Reserve.

In fact, the one-year outlook for inflation rose to 6.8% in June, a 0.2 percentage point monthly gain and the highest in a data series that stretches back to June 2013.

Expectations diminished for ensuing years. The three-year outlook fell to 3.6% from 3.9% a month ago, while the five-year outlook edged down to 2.8%, a 0.1 percentage point reduction.

The Survey of Consumer Expectations comes as the Fed is raising interest rates to address inflation running at its highest level since 1981. Fed officials have raised benchmark short-term borrowing rates 1.5 percentage points this year and have indicated more increases are coming until inflation shows clear signs of a pullback.

June’s survey results show some confidence that tighter monetary policy will have an impact, though the expectations for the years ahead remain well ahead of the Fed’s 2% long-run inflation goal.

While participants generally expect prices to keep rising, the outlook for home prices fell dramatically.

The median expected change in home prices for the next year dropped to 4.4%, the lowest survey reading since February 2021 and the second-largest monthly decline in the survey’s history next to the steep plunge at the beginning of the Covid pandemic in March 2020. May’s survey had indicated a 5.8% annual rise.

Anxiety also increased about the employment picture.

The mean probability that the unemployment rate, currently at 3.6%, will be higher a year from now rose to 40.4%, a 1.8 percentage point increase and the highest level since April 2020. The likelihood of losing one’s job over the next year rose to 11.9% from 11.1%, though New York Fed officials indicate that the reading is still well behind the pre-pandemic level of 13.8%.

Household spending growth expectations pulled back from an all-time high in May to 8.4%, which is still well above the 2021 average of 5%.

The latest inflation reading will come out Wednesday, with June’s consumer price index expected to show a year-over-year increase of 8.8%, up from 8.6% in May, according to Dow Jones estimates.



This story originally Appeared on Cnbc.com