Source: chainstoreage.com, July 2023
Consumer sentiment in July reached its highest level in nearly two years even as inflation expectations inched up.
The University of Michigan’s index of consumer sentiment rose for the second straight month, increasing 13% over June to a preliminary July reading of 72.6. It was the highest level since September 2021.
All components of the index improved significantly in July. Consumers’ view of current economic conditions rose to 77.5, up from 69.0 in June. The expectations index rose to 69.4, up from 61.5 in June.
“Overall, sentiment climbed for all demographic groups except for lower-income consumers,” said Joanne Hsu, surveys of consumers director, University of Michigan. “The sharp rise in sentiment was largely attributable to the continued slowdown in inflation along with stability in labor markets.”
Year-ahead inflation expectations were little changed, inching up from 3.3% in June to 3.4% in July and down from the high point of 5.4% from April 2022.
Long-run inflation expectations were also virtually unchanged from June at 3.1%, again staying within the narrow 2.9-3.1% range for 23 of the last 24 months.
