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Outlook for credit access hits record low as inflation expectations soar

A customer buys eggs at a HEB grocery store in Austin, Texas, on February 8, 2023. According to Urner Barry data, wholesale egg prices are starting to fall more than 50% from his December all-time highs.

Brandon Bell | Getty Images News | Getty Images

Consumers are becoming more pessimistic about inflation and access to credit, according to a survey released Monday by the New York Federal Reserve.

Respondents expect prices to rise by 0.5 percentage points over the next year, equating to an annual increase of 4.7%.

This is the first time the short-term outlook has risen since October and runs counter to Fed officials who expect inflation to subside as the series of rate hikes takes hold. In his latest economic forecast, the policymaker said he expects inflation, which includes food and energy prices, to fall to 2.5% in 2024.

The current full-year outlook is down from 6.6% in the same period in 2022, but well above the Fed’s 2% inflation target. The 3-year and 5-year forecasts are little changed at 2.8% and 2.5%.

Consumers expect gasoline prices to rise 4.6% next year, just below the February forecast, while food prices are up 5.9%, down 1.4% from last month’s survey.

At the same time, consumers find their access to credit diminishing.

58.2% of people reported having a lot or a little more difficulty getting credit than a year ago, a record high for a data series going back to June 2013. In February he rose from 48.8% to nearly 53%.

The prospect of not being able to meet the minimum debt service in the next year increased by 0.3 percentage points for 10.9% of respondents.

The survey also showed less optimism for equities, with only 35% expecting prices to rise a year from now, down 1.4 percentage points on a month-to-month basis.

The outcome comes as the Federal Reserve considers whether to continue raising rates or put them on hold when they meet again in May. At current market prices, there is a 69% chance of another quarter percentage point increase, according to CME Group.

Summarize this content to 100 words A customer buys eggs at a HEB grocery store in Austin, Texas, on February 8, 2023. According to Urner Barry data, wholesale egg prices are starting to fall more than 50% from his December all-time highs.Brandon Bell | Getty Images News | Getty ImagesConsumers are becoming more pessimistic about inflation and access to credit, according to a survey released Monday by the New York Federal Reserve.Respondents expect prices to rise by 0.5 percentage points over the next year, equating to an annual increase of 4.7%.This is the first time the short-term outlook has risen since October and runs counter to Fed officials who expect inflation to subside as the series of rate hikes takes hold. In his latest economic forecast, the policymaker said he expects inflation, which includes food and energy prices, to fall to 2.5% in 2024.The current full-year outlook is down from 6.6% in the same period in 2022, but well above the Fed’s 2% inflation target. The 3-year and 5-year forecasts are little changed at 2.8% and 2.5%.Consumers expect gasoline prices to rise 4.6% next year, just below the February forecast, while food prices are up 5.9%, down 1.4% from last month’s survey.At the same time, consumers find their access to credit diminishing.58.2% of people reported having a lot or a little more difficulty getting credit than a year ago, a record high for a data series going back to June 2013. In February he rose from 48.8% to nearly 53%.The prospect of not being able to meet the minimum debt service in the next year increased by 0.3 percentage points for 10.9% of respondents.The survey also showed less optimism for equities, with only 35% expecting prices to rise a year from now, down 1.4 percentage points on a month-to-month basis.The outcome comes as the Federal Reserve considers whether to continue raising rates or put them on hold when they meet again in May. At current market prices, there is a 69% chance of another quarter percentage point increase, according to CME Group.
https://www.cnbc.com/2023/04/10/outlook-for-credit-access-hits-record-low-while-inflation-expectations-jump.html Outlook for credit access hits record low as inflation expectations soar

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