Consumer Sentiment Hits Lowest Since December, Year-Ahead Inflation Outlook Jumps Amid War Concerns

12:44 PM EDT, 03/27/2026 (MT Newswires) -- US consumer sentiment this month reached the lowest since December, while year-ahead inflation expectations saw the largest one-month gain since April amid concerns about the ongoing Middle East conflict, final University of Michigan survey results showed Friday.

The main sentiment index dropped to 53.3 in March from 56.6 last month. The consensus was for the March reading to be revised to 54 from the preliminary estimate of 55.5 in a Bloomberg-compiled poll.

The year-ahead inflation outlook jumped to 3.8% this month from 3.4% in February, marking the biggest one-month gain since April, the survey showed. The five-year inflation projection ticked down to 3.2% from 3.3%.

Energy prices have surged as the nearly month-long US-Israel war with Iran has led to supply disruptions amid the closure of the Strait of Hormuz, the world's most important chokepoint for crude flows. There are no signs yet that the conflict, which has also caused damage to energy infrastructure in the Middle East, will end anytime soon.

Consumer sentiment and expectations could deteriorate if the conflict becomes protracted or if inflationary pressures from higher energy prices intensify, Consumers Director Joanne Hsu said in a statement Friday.

The gauge for current economic conditions fell to 55.8 from 56.6 sequentially in March, while the expectations measure slumped to 51.7 from 56.6, according to the survey.

"Overall, the short-run economic outlook plunged 14%, and year-ahead expected personal finances sank 10%, while declines in long-run expectations were more subdued," Hsu said. "These patterns suggest that, at this time, consumers may not expect recent negative developments to persist far into the future."

In a social media post late Thursday, President Donald Trump said the US was further delaying strikes on Iran's energy infrastructure by 10 days, following an initial five-day postponement, amid ongoing negotiations between the countries. He claimed that Tehran requested the extension.

On Thursday, the Organization for Economic Co-operation and Development said a prolonged period of high energy costs will substantially drive up consumer inflation globally, with price growth in the US seen hitting 4.2% this year.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.