US consumer sentiment unexpectedly falls in August due to rising worries of inflation

By Mucahithan Avcioglu

ISTANBUL (AA)— Consumer sentiment in the US fell in August compared to July, contrary to market expectations, according to preliminary data from the University of Michigan's consumer survey, released Friday.

The index of consumer sentiment was down to 58.6 points in August from 61.7 in July, while markets expected that the figure would rise to 61.9 in August.

"Consumer sentiment fell back about 5% in August, declining for the first time in four months," Surveys of Consumers Director Joanne Hsu said in a statement.

Hsu stated that this deterioration largely came from rising worries about inflation. "Buying conditions for durables plunged 14%, its lowest reading in a year, on the basis of high prices."

She noted that while present personal finances somewhat decreased due to rising worries about purchasing power, predicted personal finances slightly increased, coupled with a minor firming of income expectations, which are still modest.

"Overall, consumers are no longer bracing for the worst-case scenario for the economy feared in April when reciprocal tariffs were announced and then paused," she said.

Meanwhile, short-term inflation expectations increased to 4.9% in August from the previous month's 4.5%.

"This increase was seen across multiple demographic groups and all three political affiliations," Hsu noted.

Long-term inflation expectations rose to 3.9% in August from 3.4% in July. "This month ended two consecutive months of receding inflation for short-run expectations and three straight months for long-run expectations."

But still, Hsu added that both data remain well below the highs seen in April and May 2025.