Consumer Sentiment Rises to Highest Since August as Inflation Expectations Hit 12-Month Low

11:34 AM EST, 01/23/2026 (MT Newswires) -- US consumer sentiment improved to the highest reading since August as year-ahead inflation expectations reached a 12-month low, final University of Michigan survey results showed Friday.

The main sentiment index rose to 56.4 in January from 52.9 in December. That's higher than the initial reading of 54, which was the consensus in a poll compiled by Bloomberg.

"While the overall improvement was small, it was broad based, seen across the income distribution, educational attainment, older and younger consumers," Surveys of Consumers Director Joanne Hsu said in a statement.

The gauge for current economic conditions advanced to 55.4 from 50.4 last month, topping the Street's view for 52.3. The expectations measure climbed to 57 from 54.6, ahead of the market estimate for 55.

Year-ahead inflation expectations declined to 4% this month from 4.2% in December, the lowest in 12 months. The five-year inflation outlook ticked up to 3.3% in January from 3.2% the month prior.

"Uncertainty over short-run inflation expectations, as measured by the interquartile range of responses, has fallen from mid-2025 but has remained considerably elevated in recent months, comparable to levels seen in 2022," according to Hsu.

Consumer inflation held steady year over year last month, at 2.7%, while core prices grew less than projected, US government data showed earlier this month.

Sentiment plunged 21% from January 2025, as consumers continued to cite high prices and labor market concerns, Hsu said. Both the current conditions and expectations indexes logged double-digit declines year over year.

"Aside from tariff policy, consumers do not appear to be connecting foreign developments to their views of the economy," Hsu said. "Note that interviews for this release concluded on Jan. 19, two days after (President Donald Trump's) social media post announcing additional tariffs on eight countries in Europe."

Earlier this week, Trump withdrew his tariff threats against eight European nations that oppose the US' potential acquisition of Greenland, having reached "the framework of a future deal" for the Danish territory. Trump previously announced 10% tariffs on countries including Denmark, France, Germany and the UK, effective at the beginning of next month, with the duties set to increase to 25% starting June.

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