US consumer sentiment dropped in August amid concerns that inflation will continue to be high for the "foreseeable future," final results of a University of Michigan survey showed Friday.
The main sentiment index fell 6.3% sequentially to 51.7 this month. The gauge for current economic conditions decreased to 51.9 from 54.8, while the index of consumer expectations slid 7% to 51.5, according to the survey.
There are continued concerns that inflation will "remain elevated for the foreseeable future," Surveys of Consumers Director Joanne Hsu said.
"Groups who are typically less-equipped to absorb increases in cost of living also exhibited stronger decreases in sentiment, including older consumers, lower- and middle-income consumers, and those with no stock holdings," Hsu said. "With ongoing policy uncertainty, including the Iran conflict (with the US), consumers anticipate further increases in gasoline prices both in the short and long run."
US retail gasoline prices averaged $4.0898 per gallon Friday, compared with $3.2103 a year ago, according to data from AAA, a motoring and leisure travel membership organization that tracks fuel prices in the US.
The year-ahead inflation outlook eased to 4% in August from 4.2% last month, while the five-year price growth expectations remained unchanged at 3.3% for the third straight month, the consumer sentiment survey showed.
Separately, Federal Reserve Chair Kevin Warsh said Friday that monetary policymakers' primary focus should be on prices, given that the US is doing well on the employment front.
The odds of a 25-basis-point increase in the central bank's benchmark lending rate next month jumped to about 60% Friday from 35% Thursday, according to the CME FedWatch tool. The probability that the Federal Open Market Committee will keep interest rates steady fell to 40% from 65%.
"In addition to the pocketbook issues that have been central to consumers' views of the economy, they are increasingly worried that prospects elsewhere in the economy could be weakening," Hsu said.
Earlier in the week, a survey by the Conference Board showed that US consumer confidence fell in August amid a decline in the expectations index, with a "more pessimistic" outlook for business conditions and the labor market ahead.
