People will shop at Brooklyn grocery stores in New York City on May 13th, 2025.
Spencer Platt | Getty Images
According to a New York Federal Reserve survey released Tuesday, it fears that President Donald Trump’s tariffs will lead to a sharp surge in inflation.
A monthly survey of central bank consumer expectations shows that respondents in June saw inflation in 3% 12 months from now. It was on the same level as in January, when Trump took office and started the Saber Rat through trade.
The level fell 0.2 points from May, marking a setback from its peak hit of 3.6% in March and April.
Since April, Trump has slapped past 10% tariffs and has moved from a menu of so-called mutual obligations to US trading partners to a more reconciliatory approach that involves ongoing negotiations.
So far, no tariffs have appeared on most inflation measurements. According to the Bureau of Labor Statistics, the consumer price index rose just 0.1% in May, but annual inflation rates exceed the Fed’s 2% target.
Research shows that inflation expectations for three and five years were unchanged at 3% and 2.6%, respectively.
Although the headline inflation outlook has been eased, respondents expect higher prices in several important individual categories. The survey pointed out a 4.2% increase in gas prices and a 9.3% expectation for healthcare (highest since June 2023) at 9.1% for both university education and rent. The outlook for rising food prices was unchanged at 5.5%.
Employment indicators also showed some improvement, with forecasts of high unemployment rates falling by 1.1% in the next year. Additionally, the average expectation of losing a job fell by 14%, 0.8 percentage points, dropping to its lowest reading since December.
