(Reuters) – U.S. consumer expectations for inflation increased in September. However, they were less optimistic about how high fuel and home costs will go up over the coming year. This was according to a Tuesday survey by the New York Federal Reserve.

For the eleventh consecutive monthly, median expectations of what inflation would be in the following year rose to 5.3%. This is the highest point since 2013, when the survey began. Inflation expectations for the next three-years rose to 4.2% from 4.0% in August. Another series record high was also reached.

Officials at the Fed are currently trying to figure out whether or not the increased inflation triggered by the pandemic is going to last. This could mean that they will need to respond with a policy change, but it may also indicate if the situation will resolve itself.

The New York Fed published a separate blog last month that found longer-term inflation expectations are still well-anchored in this year’s comparison to the two-year period prior to the pandemic.

Blog post – https://libertystreeteconomics.newyorkfed.org/2021/09/have-consumers-long-run-inflation-expectations-become-un-anchored

Jerome Powell, Fed Chair, said that the central bank might reduce its asset purchases at the rate of $120 million per month and begin doing so as early as November. The Fed Chair Jerome Powell said that policymakers have a lower bar to raise interest rates. However, they are divided on the time frame they anticipate rates rising. Nine out of the 18 Fed officials stated at September’s meeting that the Fed expects the first rate rise as soon as next year.

Survey results from September, which were based upon 1,300 households and a rotating panel showed that consumers have lowered expectations of how much essential expenses will increase in the short term.

Gas prices are expected to increase by 5.9% in the coming year. This is a decrease of 9.2% from August. The fourth month of expectations for home prices fell. Consumers expect prices to go up by 5.5%, compared with 5.9% in August.