Inflation Worries Wipe Out Consumers’ Fledgling Economic Confidence

Consumer sentiment dipped slightly in October after gaining for two straight months.

The Michigan Consumer Sentiment Index came in at 68.9 in its preliminary reading for October, down from its September reading of 70.1. While the survey’s results dipped some this month, they were still almost 8% better than a year ago. The survey also showed a decline in consumers’ perceptions of current economic conditions and their future expectations. 

“Consumers are feeling slightly less upbeat as the high cost of living continues to aggravate them and election uncertainty clouds the outlook,” wrote Nationwide Financial Markets Economist Oren Klachkin in a commentary.

Inflation Concerns Linger

After steadily moving lower for the past four months, consumer inflation expectations for the near term increased in October. Consumers also predicted inflation will be around 2.9% next year, up from their estimations in the prior month. 

The survey results follow this week’s Consumer Price Index (CPI) for September, which showed that inflation wasn’t falling as fast as economists were expecting. 

“Higher prices have remained a top concern, as 44% of consumers reported this as the primary driver of their opinion on household finances,” wrote Wells Fargo economists Sam Bullard and Jeremiah Kohl.