-4First, we see that consumers’ perceived inflation rate today is generally above the actual CPI inflation rate, but reasonably close to our 2 percent target.5 Second, there is a correlation between current perceptions and future expectations of inflation at both the one- and five-year horizons.
For example, if consumers think prices have notably increased in the last 12 months, then there is a good chance they will expect inflation to stay high in the future.