Consumers are expressing growing concern over rising costs due to inflation.
Consumers in March said they expect inflation to grow 6.6% over the next year, according to the March 2022 survey of consumer expectations from the Federal Reserve Bank of New York’s Center for Microeconomic Data. This expectation is higher than the 6% growth over a year expected as of February. In the short term, median inflation uncertainty reached a series high.
Meanwhile, the median expectation for inflation three years down the line decreased to 3.7% from 3.8% in February.
The Bureau of Labor Statistics’ monthly consumer price index (CPI) report, which analyzes changes in the average prices for consumer goods and services, is set to be released for March tomorrow morning. The Biden Administration on Monday said it was preparing to see another month of soaring levels of inflation.
These impacts will likely be seen in energy price increases as a result of the conflict in Ukraine. “We expect March CPI headline inflation to be extraordinarily elevated due to Putin’s price hike,” said White House press secretary Jen Psaki, according to a CNBC report.
In February, consumer prices rose by 7.9% compared to a year ago, up from the 7.5% growth in January. This represented the highest inflation rate since the 12-month period ending in January 1982.
The inflation rate in March is expected to land somewhere around 8.5% year over year, according to UBS economists’ estimates cited by Fortune.
Meanwhile, consumer spending has started to slow down as well. In February, consumer spending increased 0.2% but at a slower pace than expected amid rising inflation. And when adjusted for inflation, spending fell by 0.4%.
A spring 2022 Consumer Sentiment Survey from Alvarez & Marsal Consumer Retail Group found that inflation was the No. 1 barrier to spending for consumers.
Small business owners have also felt the sting of surging inflation, with one in three (33%) in Q1 saying that inflation costs are their primary concern in running their business, according to a quarterly survey from the U.S. Chamber of Commerce and MetLife.
Given inflationary challenges, 67% of small business owners said they have raised their prices to stay afloat. 41% said they have cut their staff and 39% said they have taken out a loan in the last year.