What to expect from inflation expectations

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Kimberly Adams (0:55)

What consumers are expecting when it comes to inflation and what consumers are doing in response to the cyclospora outbreak.

From Marketplace in Washington, I'm Kimberly Adams. Later this morning, the New York Fed will release its monthly Survey of Consumer Expectations. It will provide some of the data points the Federal Reserve's Rate Setting Committee will use to decide whether to raise interest rates in order to tamp down inflation. Marketplace's Kaylee Wells has more on what to expect.

Kaylee Wells (1:25)

Inflation is still a problem because energy prices are high, says Pavlina Cherneva at Bard College. So as the war in the Mideast drags on.

Pavlina Cherneva (1:33)

There are no indications at this moment that inflation expectations are slowing down.

Kaylee Wells (1:40)

How consumers are feeling about inflation comes down to how they're feeling about what they're seeing in two places. The grocery store and the gas station, says Stephen Brown, who is Chief US. Economist at Capital Economics.

Tyler Shipper (1:52)

There was a rebound in gasoline prices. Likewise, there's been quite a few news stories about food inflation.

Kaylee Wells (1:59)

The New York Fed survey measures what kind of inflation people expect one year, three years, and five years from now. Tyler Shipper at the University of St. Thomas says it's those longer-term expectations we should be watching.

Tyler Shipper (2:11)

If people start believing that inflation is always going to be well above their target, that could be something that is like a self-fulfilling prophecy.

Kaylee Wells (2:20)

He says inflation gets worse when consumers accept it. Like if Shipper goes to the grocery store already expecting higher prices.

Tyler Shipper (2:27)

I'm not going to comparison shop. Or when I ask for a raise, I'm going to ask for a bigger raise than I used to, because I know that prices tend to be going up more now than they used to.

Kaylee Wells (2:38)

So food prices go up, wages go up, rinse, repeat, and presto, long-term inflation. I'm Kaylee Wells for Marketplace.

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Kimberly Adams (4:05)

FOR MONTHS NOW, PEOPLE HAVE BEEN GETTING SICK WITH CYCLOSPORA. THE OUTBREAK HAS SO FAR BEEN LINKED TO BAGGED LETTICE AND TO TAYLOR FARMS IN PARTICULAR. BUT THERE HAVE BEEN OTHER FOOD-BORN ILLNESS OUTBREAKS AND RECALLS RECENTLY, INCLUDING SALMONELLA IN EGGS AND HALAPENIOS. ALL OF THIS IS AFFECTING GROCERY STORES AND RESTAURANTS AND LETTICE SALES IN PARTICULAR. MARKETPLACE'S SIMANTHA FIELDS HEADED TO A FARMER'S MARKET TO SEE HOW PEOPLE THERE ARE FEELING ABOUT THEIR PRODUCE.

Samantha Fields (4:34)

ON TUESDAYS FROM MAY TO DECEMBER, YOU CAN FIND BARRY SAVOY IN RITTA HOUSE SQUARE IN PHILADELPHIA, SELLING TOMATOES AND EGGPLANT, PEPPERS AND BROCCOLI.

Barry Savoy (4:43)

And then lettuce. That is my specialty. I always say lettuce is what pays my mortgage.

Samantha Fields (4:53)

SAVOY GROWS THAT LETTICE AT THE SMALL ORGANIC FARM HE RUNS WITH HIS BUSINESS PARTNER, CAROL D'MAIO, ABOUT 40 MINUTES OUTSIDE THE CITY IN WILLIAMSTOWN, NEW JERSEY.

Barry Savoy (5:03)

We have a specific soil that makes great kale and great lettuces and great escaroles and frisees and stuff like that, just really flavorful.