April and May inflation was overpredicted by year-ahead consumer-based surveys.

Figure 1: CPI inflation year-on-year (black), median expected from Survey of Professional Forecasters (blue +), median expected from Michigan Survey of Consumers (red), median from NY Fed Survey of Consumer Expectations (light green), unit costs (chartreuse), all in %. May 2024 Michigan observation is preliminary. NBER defined peak-to-trough recession dates shaded gray. Source: BLS, University of Michigan via FRED and, Philadelphia Fed Survey of Professional Forecasters, NY Fed, Atlanta Fed and NBER. 

The SPF year ahead for May is at 2.51%, slightly above the 2.45% that I estimate is consistent with a 2% PCE deflator inflation. Interestingly, with median unit cost growth back at roughly April 2018 levels, there’s little evidence of a wage-price spiral.

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