Year-ahead inflation expectations in US plummet to lowest since March 2021

ISTANBUL

Year-ahead inflation expectations in the US plummeted to 3.1% in December, from 4.5% in November, recording its lowest reading since March 2021, a survey by the University of Michigan said Friday.

Long-run inflation expectations, meanwhile, decreased to 2.8% this month, from 3.2% last month, matching the second-lowest reading seen since July 2021, said the survey.

US consumer sentiment jumped 13% in December, erasing all declines from the previous four months, it added.

The index of consumer sentiment increased 8.1 percentage points to 69.4 in December, from 61.3 in November, according to the survey's preliminary results.

The figure also beat the market expectation, which estimated the index to come in at 62.0.

"Sentiment is now about 39% above the all-time low measured in June of 2022 but still well below pre-pandemic levels," Surveys of Consumers Director Joanne Hsu said in a statement. "All five index components rose this month, led by surges of over 24% for both the short and long-run outlook for business conditions."

"A growing share of consumers—about 14%—spontaneously mentioned the potential impact of next year’s elections. Sentiment for these consumers appears to incorporate expectations that the elections will likely yield results favorable to the economy," she added.

The index of current economic conditions increased by 5.7 points to 74.0 in December, from 68.3 in November, according to the survey results.

The index of consumer expectations jumped 9.6 points to 66.4 from 56.8 during that period.