US consumer sentiment continued to fall in May as cost pressures tied to the Middle East conflict sent the measure tumbling to all-time lows, University of Michigan's preliminary survey showed Friday.
The main sentiment index dropped to 48.2 in May from April's 49.8, which itself was a record low figure. The latest print marked the third consecutive monthly decrease. Wall Street expected a 49.5 print, according to Bloomberg's poll.
"Consumers continue to feel buffeted by cost pressures, led by soaring prices at the pump," Surveys of Consumers Director Joanne Hsu said in a statement. "Middle East developments are unlikely to meaningfully boost sentiment until supply disruptions have been fully resolved and energy prices fall."
Energy prices have soared in the aftermath of the US-Israel war with Iran that has disrupted shipments through the Strait of Hormuz. A fragile ceasefire between Washington and Tehran appears to be holding, with the two sides said to be closing in on a peace deal.
The year-ahead inflation outlook dropped to 4.5% this month from 4.7% in April, the University of Michigan survey showed. The current outlook is still well above the 3.4% reading in February, prior to the start of the Middle East conflict.
The five-year inflation forecast fell to 3.4% from 3.5%.
The gauge for current economic conditions declined 9% month-over-month to 47.8, while the expectations measure edged 0.8% higher to 48.5.
"Current conditions fell back about 9%, owing to a surge in concerns about high prices both for personal finances as well as buying conditions for major purchases," Hsu said. "Real income expectations continued a decline that began in March."