US consumer sentiment fell in August after two straight monthly gains amid continued inflation concerns, while year-ahead price growth expectations rose, preliminary results of a University of Michigan survey showed Friday.
The main sentiment index dropped 7.6% sequentially to 51 this month. That snapped a streak of two consecutive months of improvement, Surveys of Consumers Director Joanne Hsu said. The consensus was for a 55 print in a Bloomberg poll.
"Although the early-month weakening in sentiment was pervasive across various demographic groups, notably large reductions were seen among older consumers, lower-income consumers, and those without a college degree," Hsu said. "These groups are all particularly vulnerable to any erosion of purchasing power stemming from inflation."
Year-ahead inflation expectations moved higher to 4.3% in August from 4.2% last month, while the five-year price growth forecast remained unchanged at 3.3% for a third consecutive month, according to the survey.
In the year ahead, only 8% of consumers expect their income growth to surpass inflation, down from 18% in December 2024. This is "a reflection of the belief that high prices will continue to be burdensome," Hsu said.
Earlier this week, official data showed that US annual consumer inflation slowed to a four-month low in July.
The gauge for current economic conditions dropped 5.5% month over month to 51.8 in August, while the expectations index fell 8.7% to 50.6, the University of Michigan survey showed Friday.
"While views of personal finances saw only minor declines, expected business conditions sank 11% for the short run and 17% for the long run," Hsu said.
