The Psychology of Inflation.

From Marketplace, I'm Sabrie Benashore,

Infer David Brancaccio.

This is one of those weeks where we get answers to one of the economic questions of our time how are we doing on inflation on

Wednesday we'll get July's CPI the consumer price index that's overall

inflation tomorrow we'll get inflation at the wholesale level and later today we get something more

psychological consumer expectations of inflation where people think inflation is going to be as

measured by the New York Fed.

Those expectations have been cooling. People think a year from now

inflation will be at about 3%. Five years from now they expect it to be about 2.8%. Marketplace's Mitchell Hartman has more.

Inflation expectations signal how quickly consumers think the Fed might win its battle against

inflation.

But Robert Frick at Navy Federal Credit Union

says when it comes to consumers spending their money, inflation expectations

don't matter at all. If you're trying to chart consumer spending based on inflation expectations,

you might as well be looking at astrology.

It turns out when inflation's high, consumers don't rush out to make purchases to avoid paying higher prices later.

Instead, Frick says consumers spend primarily based on income, which is rising

faster than prices right now.

But consumers also spend based on how they feel about their personal finances,

which is pretty mediocre, says Denny Cohen-M.

At Morning Consul.

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