U.S. consumer sentiment index rises in June as gasoline prices ease
Households in the U.S. show a modest improvement in confidence in early June as lower gasoline prices provide some relief from rising living costs. The gain still leaves sentiment near historically weak levels, with inflation concerns continuing to weigh on expectations.
Highlights
- University of Michigan Consumer Sentiment Index increases to 48.9 in June from 44.8 in May, surpassing the Reuters forecast of 46.0.
- One-year inflation expectations ease to 4.6% from 4.8% and five-year expectations drop to 3.4% from 3.9%, but levels remain elevated.
- Lower gasoline prices drive sentiment gains among lower-income consumers, yet persistent inflation concerns continue to weigh on the overall outlook.
June survey points to modest consumer relief
As reported by the University of Michigan's Surveys of Consumers, its Consumer Sentiment Index rises to 48.9 in June from a record low of 44.8 in May. The reading also comes in above economists' forecast of 46.0 in a Reuters poll.Joanne Hsu, director of the Surveys of Consumers, says lower-income consumers post a particularly strong increase in sentiment, consistent with gasoline taking up a larger share of their budgets. She says consumers remain focused on household finances and continue to feel burdened by the recent escalation in inflation.
Inflation worries still weigh on outlook
The survey shows one-year inflation expectations ease to 4.6% in June from 4.8% in May, though the level remains high. Expectations for inflation over the next five years also decline, falling to 3.4% from 3.9% a month earlier.The figures suggest that lower fuel costs are offering near-term support to consumer mood, but persistent concern over price pressures continues to limit a broader recovery in sentiment. That matters for businesses and policymakers because consumer confidence can influence spending trends across the U.S. economy.
Our earlier coverage of WTI crude oil’s decline explained how prices came under pressure as markets priced in progress in U.S.-Iran negotiations and the possibility of additional Iranian supply returning. The article noted that easing fears of disruptions through the Strait of Hormuz helped unwind the geopolitical risk premium, while uncertainty around the talks could still quickly revive volatility.
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