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WASHINGTON — Consumer sentiment increased to a five-month high in July, but the improvement is likely temporary as renewed conflict in the Middle East raises gasoline prices.
The University of Michigan's Surveys of Consumers said on Friday that its Consumer Sentiment Index rose to 54.4 this month, the highest reading since February, from a final reading of 49.5 in June. Economists polled by Reuters had forecast the index rising to 51.0.
The survey was conducted from June 23 to July 13, with more than 70% of interviews completed before the collapse of the ceasefire between the U.S. and Iran last week, which pushed oil prices to a one-month high. Gasoline prices have risen in response.
"This month's rise in sentiment was pervasive across the population, seen across groups by age, income, wealth, and political party," said Joanne Hsu, the director of the Surveys of Consumers. "However, with prices remaining frustratingly high, consumers are hardly ebullient about the economy; sentiment is down 12% from a year ago. Thus, sentiment's upward momentum may prove difficult to sustain if recent declines in gas prices continue to reverse course."
The survey's measure of consumer expectations for inflation over the next year slipped to a still-elevated 4.2% this month from 4.6% in June. Consumers' expectations for inflation over the next five years held steady at 3.3%.
Government data this week showed a moderation in consumer inflation in June.
