US consumer sentiment falls to record low as inflation fears deepen

US consumer sentiment fell in April to its lowest level on record, as households grew more concerned about inflation and the economic fallout from the Iran war, according to final data released Friday by the University of Michigan.

The university’s final consumer sentiment index dropped to 49.8 in April from 53.3 in March, marking a 6.6% monthly decline. The figure was also down 4.6% from the same month last year.

The current economic conditions index fell to 52.5 from 55.8 in March, while the index of consumer expectations declined to 48.1 from 51.7.

“Consumer sentiment ticked down 3.5 index points this month, now comparable to the trough seen in June 2022,” said Joanne Hsu, director of the university’s Surveys of Consumers.

Hsu said declines in sentiment were seen across political party, income, age and education groups, while expected business conditions weakened for both short- and long-term horizons.

She noted that sentiment recovered only modestly after a two-week cease-fire was announced and gasoline prices softened slightly.

“The Iran conflict appears to influence consumer views primarily through shocks to gasoline and potentially other prices,” Hsu said.

She added that military and diplomatic developments are unlikely to improve consumer sentiment unless they ease supply constraints or lower energy prices.

Consumers expect prices to rise at an annual rate of 4.7% over the next year, up sharply from 3.8% in March. Long-run inflation expectations also increased, with consumers seeing prices rising 3.5% annually over the next five to 10 years, the highest level since October.