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Consumer inflation expectations have crept up over the past six months. A University of Michigan survey in June found consumers thought a year from now price levels would rise roughly 5%. That is well above the actual 2.4% inflation reading last month.If consumers believe the price of a car or washing machine will be significantly higher a year from now, the economically rational response is to buy that car or washing machine today.And while they’re at it, they might also think about asking for a raise.That kind of thinking matters, said Brian Coulton, chief economist at Fitch Ratings.“Inflation expectations matter because they affect people’s behavior,” Coulton said. “So, they will affect the willingness of workers to carry on working with a given level of wages.”When consumers buy more now in anticipation of higher prices — and workers demand higher pay — it can lead businesses to raise their own prices to cover increased cos …
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