Concerns that President Donald Trump’s tariffs could trigger a significant increase in inflation have diminished, as indicated by a recent survey conducted by the New York Federal Reserve, released on Tuesday.
The monthly Survey of Consumer Expectations revealed that respondents in June anticipate inflation to remain at 3% over the next year, a figure consistent with expectations recorded in January before Trump introduced his aggressive trade policies.
This marks a slight decline of 0.2 percentage points from May, and a retreat from the 3.6% peak seen in March and April.
Recently, the Trump administration shifted from imposing broad 10% tariffs and reciprocal duties on U.S. trading partners to a more diplomatic strategy involving ongoing negotiations.
So far, there has been little noticeable impact of tariffs on overall inflation metrics. According to the Bureau of Labor Statistics, the consumer price index saw a modest increase of just 0.1% in May, though the annual inflation rate remains at 2.4%, surpassing the Federal Reserve’s target of 2%.
Expectations for inflation over the three- and five-year periods remained unchanged at 3% and 2.6%, respectively, as outlined in the survey.
Despite the overall inflation outlook easing, respondents continue to anticipate rising prices in several critical categories. Gas prices are expected to climb by 4.2%, medical care costs by 9.3%—the highest since June 2023—along with increases of 9.1% projected for both college tuition and rent. Expectations for food price increases remained steady at 5.5%.
On the employment front, there were signs of improvement as well, with a 1.1 percentage point decline in the anticipated unemployment rate over the next year. Additionally, the average expectation of losing one’s job dropped to 14%, which is down by 0.8 percentage points and represents the lowest level since December.
