Usman Salis
⬤ U.S. consumers now expect inflation to run at 4.1 % over the next year, the December Michigan Survey reports. That is well below the 6 %-plus reading reached in mid-2025 and ends the sharp climb seen earlier in the year.
⬤ Since early 2021 the survey has swung sharply. Expectations rose steadily until they topped out near 5.5 % in 2022 then oscillated through 2023 and 2024 as price pressures eased. The extreme came in 2025 when the measure neared 7 %; December's result indicates the turbulence has subsided.
This is a clear step down from the high volatility recorded earlier in the year.
⬤ The latest figure aligns with the wider return to steadier conditions after two years of sharp moves. Expectations now sit near the 4 % zone that prevailed before the mid-2025 jump. That level remains above the Federal Reserve's long run goal - yet the downward trend shows households believe the earlier price shocks are fading.
⬤ The reading matters because expected inflation shapes behaviour - it guides household spending plans, wage talks plus broader market mood. If the drop persists, it should lower fears of a renewed price surge and lend stability to financial markets ahead.
Usman Salis
