July 7 (Reuters) - U.S. consumers grew more concerned about near-term inflation pressures in June even as their worries about gasoline prices eased and were more upbeat about current and future personal finances, a New York Federal Reserve report showed on Tuesday.
Inflation a year from now was expected to be 3.7% in June, which would mark the highest reading since September 2023, the regional Fed bank said in its latest Survey of Consumer Expectations. The figure for May was 3.5%.
Inflation three years from now was expected to be 3.3%, marking the highest level since June 2022. In comparison, May's reading was 3.1%. Expected inflation five years from now, which is most closely watched by central bank officials, held steady at 3%.
Prevailing inflation readings have been under considerable pressure from a surge in energy prices due to the war in the Middle East. The Personal Consumption Expenditures Price Index rose 4.1% on a year-over-year basis in May, compared to a 3.8% gain in April.
The war snared the transit of critical energy products and other goods and drove sharp increases in prices of commodities such as gasoline and diesel, which came on top of inflation pressures that had been overshooting the Fed's 2% inflation target.
Price pressures are expected to moderate due to the drop in energy prices following the signing of a preliminary U.S.-Iran peace deal.
LESS CONCERN ABOUT GASOLINE PRICES
In a television interview earlier on Tuesday, New York Fed President John Williams said, "Inflation is still too high," while adding "I do feel a little bit more positive about the near-term inflation outlook because of the energy price declines that we're going to see."
Fed officials closely track inflation expectations because most agree public perceptions of where prices are headed strongly influence where price pressures currently stand. They largely agree the public eventually expects inflation to return to the central bank's target due to the stability of longer-term expectations readings.
In his first press conference since taking over as head of the U.S. central bank, Fed Chairman Kevin Warsh said last month that "I am pleased to report that members of the (Federal Open Market Committee) are unambiguous and unanimous: This Committee will deliver price stability."
The Fed left its benchmark interest rate unchanged in the 3.50%-3.75% range following the end of its June 16-17 meeting, although a number of policymakers indicated a need for higher rates later this year to control inflation.
The New York Fed survey found that although the near-term expected path for inflation has moderated, the public is less worried about gasoline prices, which in June moderated to a level last seen in August 2022.
The report also found that the public in June had upgraded its labor market outlook and was more upbeat about the current and future state of personal finances. That said, views on current and future credit access were mixed.
Reporting by Michael S. Derby; Editing by Andrea Ricci and Paul Simao
