US inflation exceeds 2% for 65 consecutive months: consumers begin to "accept" high prices, Federal Reserve officials worry about entrenched inflation mindset

FX168 Finance October 15 Report—— According to data analysis, American consumers are currently experiencing one of the longest periods of high inflation on record. Some consumers are beginning to view high inflation as the new normal, which could undermine the effectiveness of the Federal Reserve's monetary policy tools. Cleveland Fed President Beth Hammack stated that what is worrisome is that consumers have started to regard high inflation as a "fact of life."

American consumers are experiencing one of the longest periods of high inflation in nearly a century, and more and more people are beginning to accept high prices as the new normal. This shift is sounding alarms within the Federal Reserve.

According to the Consumer Price Index (CPI) released this Wednesday (October 14), the CPI rose by 3.7% year-over-year in September. This means the US CPI has remained above the recognized 2% inflation target for about 65 consecutive months—over five years. The prolonged rise in prices has cast a shadow over ordinary Americans' outlook towards the economy, impacting their budget planning for the upcoming months and even influencing their choices in the midterm elections. Meanwhile, the Federal Reserve policymakers are growing concerned about whether the public’s inflation expectations are already deeply entrenched and difficult to effectively bring down.

The Duration of High Inflation Sets a Century-Long Record, Average Increases Remain at Historic Highs

This current bout of stubborn inflation ranks among the longest in modern US history. CNBC's analysis of US Bureau of Labor Statistics data shows that the record for monthly CPI exceeding 2% has set a new record for the 21st century. Looking back to the late 1940s, only twice in American history has there been a longer period of high inflation. Since inflation surpassed 2% in early 2021, the average CPI has remained around 4.5%. The last time there was such a high average value for a sustained period was in the late 1980s.

Consumer inflation expectations are also rising. According to a New York Fed survey released last week, one-year inflation expectations in September increased by 0.3 percentage points to 3.9%, the highest reading in more than three years. Public concerns about price hikes have extended from actual data to future expectations.

Inflation Expectations May Become a “Self-Fulfilling Prophecy,” Monetary Policy Effectiveness Questioned

The central concern among central bank officials is that businesses and consumers may begin to permanently adjust their behaviors to adapt to high prices, which can have ripple effects across the entire economy. If businesses expect costs to rise, they will preemptively raise prices for consumers; if workers expect persistent inflation, they will demand higher wage increases to hedge against price hikes in advance. All these behaviors could turn inflation into a self-fulfilling prophecy, thereby weakening the effectiveness of the Federal Reserve’s monetary policies.

Gary Richardson, an economist who once served as the Federal Reserve historian, says inflation expectations must remain anchored for monetary policy to affect the economy effectively and predictably—this should be the top priority for any central bank. Currently, Fed officials are closely monitoring how consumers are reacting to inflationary pressures.

Minneapolis Fed President Neel Kashkari revealed at an event last month that a union leader told him that for their members, inflation is worse than recession—a conversation that influenced his internal balancing of the Fed’s dual mandate. At an economists' gathering in Ohio, Cleveland Fed President Beth Hammack said she does not take well-anchored long-term inflation expectations for granted. With inflation rising consecutively, the risks of entrenched inflation thinking and mindset are increasing.

High Prices Squeeze Daily Life, Consumer Confidence Plummets to Historic Lows

In the district overseen by Hammack, the Cleveland Fed President shared on social media that she found local residents are "making trade-offs" rather than "downgrading consumption," such as having to choose between buying groceries and paying essential bills. After enduring years of high inflation, consumers feel helpless about the cumulative increase in daily costs. To make matters worse, in recent months, inflation has outpaced wage growth, continually eroding the purchasing power of the average consumer.

The consumer confidence survey closely tracked by the University of Michigan earlier this year fell to an all-time low. In 2026, the proportion of respondents who cited high prices as the main reason for worsening personal financial situations surpassed 50% for the first time ever. Joanne Hsu, director of the University of Michigan survey, said high prices are dominating consumer thinking, and they still see it as an unacceptable reality of life. Compared with Democratic voters, Republican and independent voters have suffered a greater decline in consumer confidence this year. The pending question is whether voters dissatisfied with the rising cost of living will shift control of Congress away from the Republican Party and President Trump in the midterm elections.

Expert Tip: Prices May Not Fall, but Wage Growth Is Expected to Outpace Inflation

Although the public’s outlook is pessimistic, economists still caution that ordinary Americans should not expect prices to fall from current levels. Deflation—an annual price increase below 0%—could instead drag the US economy into a downward spiral. A more realistic hope for the public is to see the 12-month inflation rate drop below the rate of wage growth. If this situation persists long enough, higher wages and stronger purchasing power will give consumers more capability to absorb current price levels.

Olena Nicks, an analyst and local official from Long Island, New York, is one such consumer tightening her belt in the face of high prices. Nicks said she's clearly noticed the steep increases in prices for fresh groceries and airfare in recent years. This 34-year-old consumer said she has cut back on dining out or even getting fast food, and her get-togethers with friends have switched from activities like bowling to more affordable nights at home. She said, "Even calling it frustrating doesn't do it justice—it's like feeling trapped."

Conclusion

In summary, the United States is trapped in the longest high inflationary period in nearly a century, with CPI exceeding the 2% target for 65 consecutive months. High prices not only erode public purchasing power but are also quietly changing consumption habits and inflation expectations. The entrenchment of inflation expectations poses perhaps the greatest challenge to the central bank. Fed officials have clearly expressed their vigilance; interest rate hikes remain their primary tool for curbing inflation. In the short term, high borrowing costs will further burden consumers, but over the long term, controlling inflation is beneficial for the public. As midterm elections approach, public discontent with high prices is becoming a crucial variable influencing the political landscape. Whether consumers can see wage growth outpace prices will be the key test of this round of economic policies.