News US Economy News The Balance Today: News You Need To Know on Sept. 12, 2022 Inflation’s Going To Improve, Many of Us Expect By Kara Greenberg Kara Greenberg Twitter Kara Greenberg is the newsletter editor for The Balance. She joined the team in 2021 as a finance editor and now owns the production and strategy of The Balance's weekday and weekend newsletters. Kara has also written and edited for Investopedia, and she was previously a researcher and editor at The Wire. Earlier in her career, she worked in financial compliance and due diligence at Loomis, Sayles & Company and The Bank of New York Mellon. learn about our editorial policies Published on September 12, 2022 Photo: Kinga Krzeminska / Getty Images Ahead of the Labor Department’s inflation report for August tomorrow, many of us are expecting prices to grow at a slower pace a year from now. The Federal Reserve released the results of its latest survey of consumers on what they expect inflation to be in the future. In a sign of rising optimism, the research showed that those surveyed believe inflation will slow significantly, both in the medium and long term. Median one-year-ahead expectations for the annual rate of inflation fell to 5.7% in August from 6.2% in July—still relatively high but far lower than the actual inflation rates we’ve seen all summer, with prices up 8.5% in July from the year before. Three-year-ahead projections fell from 3.2% to 2.8%, not far from the Fed’s target rate of 2%. Meanwhile, more respondents believe their incomes will rise, as median expectations for rising income hit a record high of 3.5% in August. Fewer households reported they were in a worse financial situation compared to a year ago, and fewer households expect to be worse off a year from now. If you’re hoping to buy a home, you might also see prices continue to come down—or at least that’s what most people expect, with median home price growth expectations declining sharply to 2.1%, in the lowest reading since July 2020. That’s below pre-pandemic levels, reflecting broad declines across the country. In perspective, home price expectations have now fallen by nearly two-thirds since the April 2022 reading of 6.0%. Tomorrow, the Bureau of Labor Statistics will release its update to the Consumer Price Index (CPI) for August, with economists forecasting the annual rate of inflation to come down to 8% year-over-year. While still relatively high and near its multi-decade highs early this summer, it would be lower than July's 8.5%. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Federal Reserve Bank of New York. "Inflation and Home Price Expectations Decline Further." MarketWatch. "This Week's Major U.S. Economic Reports & Fed Speakers."