Americans are growing increasingly concerned about high prices.

Key Takeaways: - Multiple surveys indicate consumers expect inflation to worsen, though many economists and Fed officials remain optimistic about easing price pressures. - September's relatively mild inflation data supported the optimistic view, but certain details revealed persistent upward price pressures. - The moderation in September inflation was largely due to an unexpected slowdown in a key housing cost metric—a scenario unlikely to repeat—while core goods prices surged sharply. - Recent reports show consumers fear sustained high inflation is eroding household budgets with little near-term relief.

The Conference Board's Tuesday survey revealed deepening consumer concerns about accelerating inflation. Respondents projected a 5.9% inflation rate one year from now, up from September's 5.8% expectation. This contrasts with Fed officials' projections of declining inflation—a forecast they consider sufficiently certain to justify anticipated rate cuts this week.

"Price and inflation concerns dominated consumers' written comments, remaining the primary factor shaping economic sentiment," noted Stephanie Guichard, Senior Economist at The Conference Board.

Data Substantiates Inflation Worries: Last week's BLS report showed September inflation remained elevated, with CPI rising 3% year-over-year (up from August's 2.9%). While below forecasts, this still exceeds the Fed's 2% target. Detailed analysis reveals valid grounds for consumer concerns.

Economic Implications: Resurgent inflation in coming months could harm consumers and disrupt Fed plans to support labor markets through rate cuts.

Brean Capital's John Ryding observed that September's inflation would have been significantly higher without an unexpected 0.1% monthly rise in Owners' Equivalent Rent (OER)—a key housing metric—versus August's 0.4% increase. Deutsche Bank economists called OER's sharp decline "more likely a statistical anomaly than a trend signal."

Meanwhile, concerning acceleration appeared in core goods prices (excluding food and energy), which rose 1.5% annually—unusual during stable inflation periods when such prices typically decline to offset other increases. Notably, core goods face the heaviest tariff impacts. Since April's "Liberation Day" tariff hikes, retailers have gradually raised prices in response.

Should the Fed Ease Inflation Control? These developments prompt some economists to question why Fed officials signal further rate cuts. After holding rates steady through August to curb inflation, the Fed cut rates 25 basis points in September, with markets expecting additional cuts this week and in December to bolster weak employment.

"The conditions for inflation returning to 2% aren't yet in place," Ryding noted.

Fed policymakers maintain tariff-driven inflation is transitory, with price growth gradually easing next year—a view shared by many economists. Chair Powell recently stated, "The baseline expectation is tariffs will have relatively transient inflation effects—essentially a one-time price level change."

However, Powell acknowledged inflation may prove stickier than expected, with recent data supporting this possibility. Nomura's David Seif warned, "We see unchanged underlying inflation trends in September, with ongoing tariff pressures on core goods. Looking ahead, we perceive upside inflation risks in both near and medium terms."