The latest consumer price index numbers will be released Tuesday. Year over year, the figure may be up as much as 8%. Last month, another measure of inflation (the producer price index) was up closer to 10%.

Whether inflation rates improve over the next year is determined by several factors. The first of these is energy prices. Oil prices have soared, mostly because of geopolitical problems, to over $100 a barrel. This has triggered $4 a gallon gasoline in America. In turn, consumer spending could be affected as transportation becomes more expensive.

The cost of housing also has started to rise. Partially to blame is the increase in mortgage rates due to rate increases that are part of the Federal Reserve’s effort to tame inflation.

Since the future of inflation is impossible to forecast, the effects of rising prices may be based more on concern about this than on the uptick itself.

The New York Federal Reserve has just released a study of consumer opinions about inflation during March. It shows that people believe inflation will continue to be high and that it will average 6.6% next year. Given that inflation has run about 2% over the past decade, that number is very high.

According to CNBC: “Consumers see the fastest increases coming from rent (10.2%), which accounts for about one-third of the CPI. Medical care, food and gasoline are expected to jump by 9.6%. The outlook for college costs decreased by 0.5 percentage point to 8.5%.”

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Consumer spending tends to peak in the fourth quarter of the year, as Americans increase their spending because of holiday shopping. Will this be another year when holiday buying rises and consumer spending remains strong? If people believe their income will be hurt by inflation, the increase is at risk.

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