US consumers tempered inflation expectations in late May
US CONSUMERS tempered their inflation expectations in the second half of May compared with earlier in the month, though high prices continued to weigh on sentiment.
Consumers expect prices will climb at a 3.3 per cent annual rate over the next year, down from the 3.5 per cent that was expected earlier in the month, University of Michigan data showed on Friday (May 24). They see costs rising 3 per cent over the next five to 10 years, also a downgrade from earlier in the month and matching April’s expectations.
Part of improvement may reflect a steady easing in petrol prices over of the course of the month.
While the university’s final May consumer sentiment index improved from the preliminary reading, it still registered a notable 8.1-point decrease from April and stands at a six-month low of 69.1.
The median estimate in a Bloomberg survey of economists called for the gauge to edge up from its preliminary reading of 67.4.
“While consumers recognise that realised inflation has eased substantially since 2022, a considerable share of consumers still express the burden that high prices exert on their lives,’‘ Joanne Hsu, director of the survey, said in a statement.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
In addition to high prices and borrowing costs that are raising concerns about the cost of living, respondents in the survey grew anxious about the labour market. They expect the jobless rate to rise and income growth to slow. That represents a challenge for President Joe Biden in his bid for re-election.
About four in 10 respondents blamed high prices for eroding living standards. Consumers also see less of a chance the Federal Reserve will lower interest rates in the coming year. Only one in four see a rate cut now, compared with 37 per cent in January.
The current conditions gauge decreased to 69.6 in May from 79 in the prior months. A measure of expectations fell to 68.8 from 76.
Buying conditions for durable goods decreased to a one-year low, while consumers’ perception of their current financial situation was the worst in five months. BLOOMBERG
Share with us your feedback on BT's products and services
