Consumer Sentiment Rose in July, Though Inflation Concerns Continue

Consumer sentiment inched up in July to reach its highest level in five months, though it remained below its December reading and its historical average, according to preliminary results from the University of Michigan’s Surveys of Consumers.

The survey found that consumer sentiment rose by one index point but remained 16% below December.

Consumers’ assessments of short-run business conditions improved by 8%, while their view of their expected personal finances sank about 4%, according to the preliminary results.

“Consumers are unlikely to regain their confidence in the economy unless they feel assured that inflation is unlikely to worsen, for example if trade policy stabilizes for the foreseeable future,” Surveys of Consumers Director Joanne Hsu wrote in the report.

The preliminary results found that the rate of inflation forecast by consumers fell to its lowest level since February but remained above December. This indicates that they “still perceive substantial risk that inflation will increase in the future,” Hsu said.

Consumers’ year-ahead inflation expectations dropped from 5.0% in June to 4.4% in July, while their long-run inflation expectations fell from 4.0% to 3.6%. This marked the second straight month in which year-ahead inflation expectations declined, and the third consecutive in which long-run inflation expectations did so.

The Conference Board’s most recent report on consumer confidence, which was released June 24, found that it slid in June after rising in May.

That report said that the decline in consumer confidence was shared by all age groups and most income groups, and that consumers were concerned about tariffs, inflation and high prices.

The Federal Reserve Bank of New York said in its June Survey of Consumer Expectations, which was released July 8, that consumers had some optimism on inflation, believing that price increases are still likely to be elevated, but at a slowing pace.

Data released Thursday (July 17) by the Census Bureau showed that retail spending showed signs of resilience in June, with sales rising 0.6% from May and climbing 3.9% versus the same month a year ago.

The report marked a partial recovery from two months of declines, but hinted at changing consumer priorities as Americans navigate higher prices and ongoing tariff uncertainty, PYMNTS reported.

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