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US consumer sentiment fell 6.3 per cent month-on-month to 51.7 in August, extending concerns over inflation and weakening economic prospects, according to the final reading from the University of Michigan's Surveys of Consumers. The index was also 11.2 per cent lower than a year earlier.
The decline was broad-based, with sentiment falling across all political groups and particularly sharply among Republicans, Surveys of Consumers Director Joanne Hsu said. Consumers who are generally less equipped to absorb higher living costs, including older people, lower- and middle-income households and those without stock holdings, also recorded stronger declines in sentiment. The Current Economic Conditions Index fell 5.3 per cent from July to 51.9 in August, while the Index of Consumer Expectations declined 7 per cent to 51.5. Compared with August 2025, the two indices were down 15.9 per cent and 7.9 per cent, respectively. Persistent inflation concerns remained a key drag on consumer confidence. Hsu said consumers continued to worry that inflation would remain elevated for the foreseeable future, with uncertainty over policy and the Iran conflict adding to concerns about gasoline prices in both the short and long term. Despite the broader concerns about prices, consumers' year-ahead inflation expectations eased marginally to 4 per cent in August from 4.2 per cent in July. However, the latest reading remained well above the 3.4 per cent recorded in February, before the Iran conflict began, and was higher than all readings recorded during 2024. Long-run inflation expectations were unchanged at 3.3 per cent for the third consecutive month. The measure remained above the 2.8 per cent-3.2 per cent range recorded during 2024, pointing to continued concerns about inflation over the longer term. The survey also showed growing anxiety about economic conditions beyond household finances. Expectations for business conditions over the next year fell 10 per cent, while the five-year outlook dropped 13 per cent. Hsu said a renewed escalation in trade tensions could worsen these trends, as consumers increasingly perceive risks to the broader economy alongside concerns about their own purchasing power. The August survey covered interviews conducted between July 28 and August 24, providing a final assessment of consumer sentiment amid continued concerns over inflation, energy prices and the economic outlook. (ANI)
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