Consumers' Year-Ahead Inflation Outlook Hits Highest Since May 2023, NY Fed Survey Shows

03:00 PM EDT, 10/07/2026 (MT Newswires) -- US consumers' one-year-ahead inflation outlook reached the highest in more than three years in September, while labor market expectations "mostly improved," a survey by the Federal Reserve Bank of New York showed Wednesday. Median one-year inflation expectations rose by 0.3 percentage point to 3.9% last month, the highest reading since May 2023, the Fed branch said. The three-year outlook edged up to 3.3% from 3.2%, while the five-year inflation views were unchanged at 3%, according to the survey. Year-ahead price projections for gas and food moved higher by 0.2 percentage point each to 4.8% and 5.5%, respectively. The outlooks for medical care, the cost of college education, and rent also increased, the survey showed. Diesel prices in the US surged to a record high of $6.5276 per gallon Sept. 22, according to data from AAA, a travel organization that tracks fuel prices nationwide. Crude oil prices have increased for three straight months through September amid fears of prolonged global supply disruptions driven by the US-Iran conflict. "Labor market expectations mostly improved, with unemployment rate, job finding, job loss, and quit expectations all improving," the New York Fed said Wednesday. The mean probability that the US unemployment rate will be higher one year from now dropped by 0.5 percentage point to 43.9% in September, while the mean perceived probability of losing one's job fell by 0.3 percentage point to 13.5%, its lowest reading since December 2024, the Fed branch said. The mean perceived probability of finding a job if the current job was lost rose by 0.7 percentage point to 46.1%. However, the median one-year-ahead earnings growth forecast dropped by 0.3 percentage point to 2.6%, the survey showed. Last week, official data showed the US economy added 29,000 nonfarm jobs in September, representing just about a third of the 90,000 increase projected in a Bloomberg-compiled survey at the time. "Income and spending growth expectations both increased, while perceptions and expectations about households' future financial situation deteriorated," the New York Fed said Wednesday. Last month, the Fed delivered its first rate hike in just over three years to curb sticky inflation, while signaling that another rate increase could happen later this year. Fed Chair Kevin Warsh said at the time that inflation has been too high for too long. Markets are currently pricing in a roughly 83% probability that the central bank will keep its benchmark rate steady later this month, with the remaining odds in favor of a 25-basis-point hike, according to the CME FedWatch tool.