How high inflation became a 'fact of life' in the U.S.
U.S. inflation has stayed elevated for years, raising concern at the Federal Reserve that consumers may come to expect stubbornly high prices.
Key points
- US CPI rose 3.7% year over year in September, marking about 65 straight months above 2%.
- Consumers expect inflation to accelerate, with the one-year outlook at 3.9%, a three-year high.
- Fed officials worry that entrenched inflation expectations could make monetary policy less effective.
US consumers are living through one of the longest periods of elevated inflation in the past century, according to CNBC. The September consumer price index showed a 3.7% annual increase, and CPI has now been above 2% for about 65 consecutive months, more than five years.
This streak is the longest of the 21st century, based on a CNBC analysis of Bureau of Labor Statistics data. Since early 2021, when inflation began exceeding 2%, the average CPI reading has been around 4.5%, a level last seen in a period ending in the 1980s.
Consumer expectations and Fed concerns
The New York Fed's Survey of Consumer Expectations released last week showed the one-year inflation outlook rose to 3.9% in September, its highest in more than three years. Central bankers worry that businesses and consumers may permanently adjust behavior, with firms preemptively raising prices and workers seeking larger raises.
Cleveland Fed President Beth Hammack wrote in a social media post that consumers are starting to accept high inflation as a fact of life, calling that concerning. At a gathering in Ohio this week, she warned that the risk of an entrenched inflationary mindset grows with each high monthly inflation reading.
They're starting to accept high inflation as just a fact of life. That's concerning.
— Cleveland Fed President Beth Hammack
Impact on households and politics
Consumers have seen cumulative price increases outpace wage growth in recent months, reducing purchasing power. The University of Michigan's consumer sentiment survey fell to record lows earlier this year, and in 2026 the share of respondents citing high prices for worse finances surpassed 50% for the first time.
Joanne Hsu, director of the Michigan survey, said high prices are dominating consumer thinking. Consumer sentiment has dropped more sharply among Republicans and independents than Democrats this year, raising the question of whether voter anger over living costs will shift control of Washington in next month's midterm elections.
