Consumer sentiment in U.S drops in early July amid inflation concerns

Consumer sentiment in the United States dropped in early July as inflation worries weakened confidence about future economic development, according to a study released on Friday.

The preliminary reading of the consumer sentiment index of the University of Michigan dropped to 80.8 in July after the final reading in June from 85.5.

According to a Wall Street Journal survey, economists anticipated a reading of 86.3.

“Consumers’ complaints about rising prices on homes, vehicles, and household durables has reached an all-time record,” Richard Curtin, the survey director, said in a statement.

Consumer optimism decreased sharply to 78.4 in July from 83.5 in June in the next six months, with Americans growing apprehensive about the consequences of rising costs. Consumers were anticipating a 4.8% increase in the cost of living, the highest level since 2008, the survey showed.

Consumers are in a better mood than they were in the COVID-19 crisis.

The government reported on Tuesday that the consumer price index in June has rapidly increased in the past 13 years.

Since 2008, one-year inflation expectations were 4.8% higher than 4.2% in August 2008, while the five-year inflation forecasts were 2.9% higher than 2.8% in June.

“Rather than job creation, halting and reversing, an accelerating inflation rate has now become a top concern,” Curtin said. “Inflation has put added pressure on living standards, especially on lower- and middle-income households, and caused postponement of large discretionary purchases, especially among upper-income households.”

With inputs from MarketWatch 

Picture Credits: NYT