US consumers’ near-term inflation expectations declined in July for a fourth month, reaching the lowest level since April 2021, according to a Federal Reserve Bank of New York survey.

Median one-year-ahead inflation expectations fell to 3.5% last month from 3.8% in June, the New York Fed said Monday. Expectations for what inflation will be at the three-year and five-year horizons each ticked down to 2.9%, from 3%.

The improvement in the short-term inflation outlook was “broad based” across demographic groups, and consumers said they expect smaller price increases for essential living expenses such as food, medical care, and rent, over the next year — all of which saw expectations fall to the lowest levels since at least early 2021.

Households are also feeling more optimistic about their finances and the labor market, the survey found. Respondents reported reduced fears of losing their jobs and lower perceived probabilities that the US unemployment rate will be higher a year from now. The perceived odds of being able to find a new job after becoming unemployed rose.

The findings are in line with other reports showing that price pressures and consumers’ inflation expectations are cooling. But Fed officials could face an uneven path of progress as they work to bring inflation down to their 2% target.

A key measure of consumer prices excluding food and energy rose by 0.2% in July, posting its smallest back-to-back increases in two years. But producer prices grew last month by more than expected, primarily due to increases in certain service categories.

Meanwhile, consumer inflation expectations as measured by the University of Michigan unexpectedly fell in early August, despite higher gasoline and grocery costs.

Fed officials lifted their benchmark interest rate in July to the highest level in 22 years and are widely expected to leave it unchanged when they next gather on Sept. 19-20, according to pricing in futures contracts. They will have at least one more update on consumer prices and another monthly jobs report in hand by then to help guide their decision.