Consumer Sentiment Falls as Inflation Worries Pick up, Survey Shows

01:13 PM EDT, 08/15/2025 (MT Newswires) -- US consumer sentiment unexpectedly fell in August as inflation expectations rose, preliminary results from a University of Michigan survey showed Friday.

The main sentiment index dropped to 58.6 this month from July's five-month high reading of 61.7. The consensus was for a 62 print in a survey compiled by Bloomberg.

"This deterioration largely stems from rising worries about inflation," said Joanne Hsu, Surveys of Consumers director. "Current personal finances declined modestly amid growing concerns about purchasing power."

The gauge for current economic conditions tumbled 10% to 60.9, while the expectations measure ticked down 0.9% to 57.2, the survey results showed.

Year-ahead inflation expectations rose to 4.9% from 4.5% last month after receding for two months in a row. The long-run outlook climbed to 3.9% from 3.4% following a three-month decline, the survey showed.

Recent data showed that consumer inflation in the world's largest economy slowed down in July on a sequential basis, while the annual core rate jumped above 3%.

"The latest inflation report has shown that core inflation is gathering momentum," Ksenia Bushmeneva, economist at TD Economics, said in a report published Friday.

Having initially tried to absorb the effects of tariffs, businesses have now begun to pass on some of the additional costs to consumers, according to Bushmeneva.

"We expect greater pass through of tariff-related price increases over the coming months," Bushmeneva said. "With the labor market downshifting and cost pressures heating up, consumer spending is likely to remain tepid through year-end."

US retail sales rose less than projected in July amid declines in purchases of building materials and electronics, data from the Census Bureau showed Friday.

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