Tuesday, March 9, 2021

Price Inflation Expectations Soar

The February 2021 Survey of Consumer Expectations shows sharp increases in the outlook for growth in the cost of rent and gas, with both series reaching new highs. The median expectation regarding changes in the cost of rent increased to 9.0 percent in February from 6.4 percent in January. Similarly, the median year-ahead expected change in gas prices jumped to 9.6 percent from 6.2 percent over the month. The short-term inflation expectation edged up to 3.1 percent, its highest level since July 2014.

Buckle your seat belt, it is going to get very interesting.



  1. Any comment on why gold, the traditional hedge against inflation, has actually fallen in price from early October, 2020 (nearly $2000/once) to roughly $1750 in early March, 2021? The money supply has risen dramatically; crude prices have increased sharply and inflationary expectations are through the roof, yet gold prices show little life. Are (competitive?) crypto-currencies and slightly higher interest rates knocking down gold prices? What gives?

  2. There are a few factors that I discuss in the EPJ Daily Alert but the key factor is jewelry demand collapsed during the lockdowns. Gold jewelry demand in Q4 fell 13% y-o-y to 515.9t, resulting in a full-year total of 1,411.6t, 34% lower than in 2019. It will rebound.

  3. Hmmm. College costs are predicted to rise by 9%? Shouldn't they be predicted to fall?