US consumer sentiment drops in August on inflation worries

Washington: US consumer sentiment fell in August, survey data from the University of Michigan confirmed Friday, reflecting worries over persistent inflation as war in the Middle East weighs on the world's biggest economy.

"Consumer sentiment confirmed its early month reading, falling about six percent from last month," said Joanne Hsu, director of the survey.

This is 11 percent down from a year ago, with the gloominess fueled by "continued worries that inflation will remain elevated for the foreseeable future," she added.


The university's consumer sentiment index came in at 51.7 this month, a slight revision from the preliminary reading of 51.0 points.

This was a retreat from July's reading of 55.2 points.

Global energy prices soared after the United States and Israel launched the war on Iran in late February, plunging the Middle East into conflict.

Tehran had retaliated by attacking Washington's Gulf allies and snarling a fifth of the world's oil and gas supplies.

"Sentiment declines in August were seen for all political groups and were particularly acute among Republicans," the University of Michigan survey found.

This comes just months ahead of key US midterm elections in November.

Survey data added that older consumers, alongside those from lower- and middle-income groups, showed a sharper drop in sentiment.

War in the Middle East has already sent US inflation higher, with prices at the gasoline pump climbing and piling pressure on households.

"With ongoing policy uncertainty including the Iran conflict, consumers anticipate further increases in gasoline prices both in the short and long run," Hsu said.

While year-ahead inflation expectations crept down to 4.0 percent, from 4.2 percent in July, current readings still exceed levels seen before the war began.