US consumer sentiment sinks in early February amid inflation concerns

• The preliminary consumer sentiment index falls to 61.7 in the first half of the month

• The survey’s one-year inflation forecast rises to 5%, the highest level since July 2008

Consumer sentiment in the United States dropped to its lowest level in more than a decade in early February as inflation worries weakened confidence about future economic development, according to a study released on Friday.

The preliminary consumer sentiment index at the University of Michigan fell to 61.7 in the first half of this month, the lowest since 2011, from a final score of 67.2 in January.

Read more: US consumer debt totals $15.6 trillion in 2021, record increase in 18 years

Reuters polled economists, who predicted the index would rise to 67.5. The survey's indicator of current economic conditions declined to 68.5 from 72.0 in January. Its index of consumer expectations fell to 57.4 in February, down from 64.1 in January.

The recent decreases have been driven by deteriorating personal financial prospects, “largely due to rising inflation, less confidence in the government's economic policies, and the least favorable long-term economic outlook in a decade,” the survey said. 

Read more: U.S. consumer sentiment drops in early August to decade low amid delta variant concerns

Meanwhile, the survey’s consumer inflation has risen to 5% in a year, the highest level since July 2008, up from 4.9 percent in January. The 5-year forecast remained steady at 3.1 percent.

Consumer Price Index 

According to data issued by the Labor Department on Thursday, the consumer price index jumped 0.6 % in January after climbing 0.5 % in December.

Read more: US producer price surges 0.2% in December, miss analysts estimates

In January, the CPI climbed at an annual pace of 7.5 %. This was the greatest year-on-year increase since February 1982, and it came on the heels of a 7 % increase in December.

Picture Credits: Al Jazeera