Consumer sentiment in U.S drops in July amid inflation concerns

Consumer sentiment in the United States dropped to a five-month low in July as inflation worries weakened confidence about future economic development, according to a study released on Friday.

The final reading of the University of Michigan's Consumer Sentiment Index plummeted to 81.2, the lowest level since February, from 85.5in June.

The final figure for July, on the other hand, was higher than the preliminary estimate of 80.8 and higher than the consensus prediction of 80.8 among economists surveyed by Reuters.

According to UM economist Richard Curtin, director of the surveys, the sentiment index among families with earnings above $100,000 US dollars fell 8.1 percent, while sentiment among households with incomes below $100,000 US dollars fell only 1.1 percent.

Complaints about expensive housing, automobile, and household durable costs reached their highest level in more than a half-century. These objections were used to justify decreasing their purchasing attitudes to their lowest level since 1982, according to Curtin.

The survey's current economic conditions index fell to 84.5, the lowest since August 2020, from 88.6 in June. This was also consistent with the preliminary measurement of 84.5 in July.

The survey's measure of consumer expectations fell to 79.0 in July from 83.5 in June, although it was still higher than the mid-month figure of 78.4.

Though, consumers are in a better mood than they were in the COVID-19 crisis.

Since 2008, one-year inflation expectations were 4.8% higher than 4.2% in August 2008, while the five-year inflation forecasts were 2.9% higher than 2.8% in June.

With inputs from Reuters