(Jan 10) : US consumers’ long-term inflation expectations jumped to the highest since 2008 on concerns about potential tariffs from the incoming Trump administration.

Americans expect prices will climb at an annual rate of 3.3% over the next five to 10 years, up from the 3% expected last month, according to the University of Michigan’s preliminary January survey released on Friday. They also see costs rising 3.3% over the next year, up 0.5 percentage point from December.

As a result, the preliminary January sentiment index slipped to 73.2 from 74. The survey period includes responses from Dec 17 to Jan 6.

“Nearly one-third of consumers spontaneously mentioned tariffs, up from 24% in December and less than 2% prior to the election," Joanne Hsu, director of the survey, said in a statement. “These consumers generally report that tariff hikes will pass through to consumers in the form of higher prices.’’

Inflation expectations climbed across many demographic groups, particularly lower-income Americans. More concerning, 22% of respondents reported that buying big-ticket goods now would enable them to avoid future price hikes. That matches the prior month as the highest since 1990, the report showed.

Uncertainty about inflation has climbed significantly over the past year, though it remains below levels seen during the 1970s.

The university’s index of overall consumer expectations fell to a six-month low of 70.2 as half of respondents said they expect unemployment to rise in the coming year. The month’s decline was concentrated among Republicans and political independents. Income expectations also dropped.

The data continue to reflect a split in sentiment based on political preference after the presidential election. A gauge of overall sentiment among Republicans has risen nearly 34 points following president-elect Donald Trump’s win, while for Democrats it’s dropped about 25 points.

The current conditions gauge climbed to 77.9, from 75.1 in December.

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