NY Fed Survey Shows Short-Term Inflation Expectations Reach One-Year High

The Federal Reserve Bank of New York’s latest survey shows that, driven by a surge in energy prices sparked by the war in the Middle East, U.S. consumers’ one-year inflation expectations for March rose to 3.42%, up from the prior value of 3%. Three-year inflation expectations were reported at 3.1%, also higher than the prior value of 3%. Five-year inflation expectations remained steady at 3%.

Short-term inflation expectations saw the largest month-over-month increase in March in a year. Consumers expect the outbreak of the war in the Middle East to push up gasoline and food prices. Respondents projected that gasoline prices will rise 9.4% over the next year, which is 5.3 percentage points higher than the increase prior to the outbreak of the conflict, and is also the highest level since March 2022. They projected food prices will rise 6% over the next year, which is up 0.7 percentage points from February.

This survey, conducted from March 2 to 31, reflects that consumer pressure increased after the United States and Israel launched attacks on Iran. The war drove oil prices higher again, further adding upward pressure on inflation. Inflation has remained above the Fed’s 2% target for five straight years.

People’s views of their own financial situation are fairly pessimistic, with the share who believe their financial situation has worsened compared with a year ago rising. The share of people who expect their financial situation to worsen over the next year also rose to the highest level since April 2025.