US inflation expectations fall ahead of US CPI release

US consumer inflation expectations marked a negative start to the week as global markets await the all-important Consumer Price Index (CPI) data for August.

That said, consumers in August saw inflation at 5.75% over the next 12 months, down from 6.2% in July and the lowest rate since October 2021, the New York Fed's monthly consumer expectations survey showed on Monday, reported Reuters.  Further, the three-year inflation expectations marked the slowest pace since late 2020 while averaging 2.8% versus 3.2% reported in July, per the news.

Additionally, the five-year inflation expectations printed a 2.0% level while matching the Fed’s target, down from 2.35% in July and 3% marked during January.

Elsewhere, US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, remained sluggish around a two-week low of 2.41%, close to 2.42% by the end of Tuesday’s North American trading session.

Given the recent weakness in the US inflation expectations, hopes of softer US CPI may keep the market sentiment firmer, which in turn could weigh on the US dollar.

Also read: US CPI Preview: Dollar set to climb on low core expectations, three scenarios