Consumers dread rising healthcare, rent costs: New York Fed
2 min read
Consumers fear price increases aren't abating anytime soon.
Median inflation expectations for the year ahead rose in June to 3.7%, according to the New York Fed's June survey of consumer expectations. That's the highest since September 2023, when the economy was recovering from a brutal surge in prices the previous year.
Expectations for inflation over the next three years also climbed to 3.3%, the most since June 2022, when inflation peaked at a 40-year high of 9.1%.
As for where they see those price increases hitting, consumers anticipate big swings coming for healthcare and rent, with medical costs surging 9.4% and rent growing 8.3% in the next year. They were most sanguine about gas costs: Consumers' price change expectations for fuel dipped to the lowest level since August 2022. Respondents also felt smaller price hikes were ahead for food and college education.
While the average rental price in the US is currently tracking below last year's levels when looking across all property types, reaching $2,014 as of July 5, according to Zillow, some markets are seeing strain. Average rents are up compared to a year ago in Chicago, for example.
Read more: How to protect your savings against inflation
The price hike story is clearer in healthcare. After pandemic-era enhanced premium tax credits expired at the end of last year, premiums and deductibles were expected to surge, contributing to millions of people dropping coverage.
Amid this price squeeze, workers' pay is currently not keeping pace with inflation. But consumers in the New York Fed's survey did anticipate pay raises in the year ahead: Their median earnings growth expectations rose to 2.8% in June, the highest since March 2025. Unemployment expectations also decreased.
Emma Ockerman is a reporter covering the economy and labor for Yahoo Finance. You can reach her at emma.ockerman@yahooinc.com.
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