Consumers expect a temporary rise in inflation
Short-term inflation expectations have responded to the recent rise in inflation, but consumers expect this increase to be temporary. Expectations for inflation one year from now have increased, but medium-term expectations have not reacted to the recent increase in inflation, and long-term expectations have fallen (Chart 3)., , Most respondents anticipate that inflation will stay within or just above the Bank’s inflation-control target range of 1 to 3 percent, consistent with medium-term inflation expectations remaining well anchored.
The uptick in consumers’ short-term expectations aligns with higher expectations in the quarter for food, gas and rent inflation. These are items that respondents purchase frequently.
Uncertainty around inflation forecasts decreased slightly in the quarter and is below the elevated levels seen at the beginning of the pandemic (Chart 4).