U.S. consumers are showing increased worry about rising inflation despite broader indicators suggesting a slowdown in price increases, according to the latest survey from the University of Michigan. The survey, conducted twice a month, revealed that American households expect inflation to accelerate to 4.5% over the next year, up from 4.2% in October and 3.2% in September. This marks the highest rate since April. Over a five-year horizon, consumers now anticipate average inflation of 3.2%, up from 3.0% in October and 2.8% in September, reaching levels not seen since 2011.

The data suggests that consumers fear a potential reversal of the recent inflation slowdown, despite ongoing signs of deceleration. The University of Michigan’s survey director, Joanne Hsu, noted that these expectations have risen despite consumers recognizing the continued inflation slowdown. This divergence in perception may cause concern for Federal Reserve policymakers, who aim to keep inflation expectations well-anchored to avoid potential disruptions in consumer behavior that could contribute to further price increases.

While the overall trend in inflation has shown a slowdown since the summer of 2022, the public’s expectations, as reflected in the University of Michigan survey, indicate apprehension about a possible resurgence in the coming months and years. The Federal Reserve has responded to the earlier inflation surge with a series of aggressive interest rate hikes, but consistent progress has been elusive.

The survey results, at odds with some other measures of inflation expectations that indicate moderation, underscore the challenge faced by the Fed in managing public perceptions. Despite market-based measures and other surveys showing a decline in inflation expectations, the University of Michigan survey suggests lingering concerns among consumers, adding a layer of complexity to the central bank’s efforts to control inflation.