(NewsNation) — Consumers are optimistic that inflation will slow down, signaling a win for recent moves by the Federal Reserve to stem it, according to a recent survey from the New York Federal Reserve.
Median expectations for where inflation will be in one year tumbled 0.6 percentage points to 6.2%, and the three-year outlook fell 0.4 percentage points to 3.2%, the lowest levels since February of this year and April of last year respectively, the survey showed.
The fall in expectations for the one-year outlook was driven by drops in year-ahead price growth changes for gasoline and food, with the decline in anticipated gasoline price growth being the second largest in the survey’s nine-year history and the decline in food price growth the largest ever, Reuters Reported.
“All of the data we have about what inflation has been doing is backwards looking,” NewsNation business contributor Lydia Moynihan said. “This is a little bit forward-looking.”
People still thought inflation will rise, Moynihan said, although they don’t think it will rise quite as much as it has been.
“People were expecting inflation to rise 6.8%, just last month, (but) now they’re expecting it to rise at 6.2%,” Moynihan said. “Still high, but going down.”
This all comes ahead of Wednesday’s Consumer Price Index report.
Traders are widely expecting the report to show that decades-high inflationary pressures eased in July following back-to-back 75-basis point hikes by the Fed in June and July aimed at combating soaring prices, according to Reuters.
For the Federal Reserve, this is positive news, Moynihan said.
“Their job is not just to hike rates, or to bring rates down, but is to set expectations,” and also signal what direction the economy will go in, she said. “This means that to an extent, they have been successful in saying, ‘Hey, look, we’re going to rein in inflation, and people are obviously taking that to heart to an extent.”
Also factoring into people’s more cheery outlook is that expectations for food increases also fell at the fastest pace ever, Moynihan said.
“It means that even though inflation has skyrocketed at a rapid pace, it’s possible for it also to come down at a pretty rapid pace as well,” she said. “But obviously, you hear the food prices are continuing to spike and so obviously (there are) a lot of competing data points there.”
Reuters contributed to this story.